Cambodian Pepper trade hit by global downturn

Van Socheata  20 July 2023 

In the first half of 2023, Cambodian pepper exports, encompassing all varieties, hit about 4,300 tonnes. This reflects a drop of over 31 per cent compared to the same period last year, according to the Ministry of Agriculture, Forestry and Fisheries.

Ministry spokeswoman Im Rachna attributes the decline to the global economic downturn which has led to a drop in orders for all goods, pepper included.

Market uncertainty, climate change impacting crop yields and quality, and unauthorised exports through Vietnamese and Thai corridors are other contributing factors, she added.

Mak Ny, president of the Cambodian Pepper and Spices Federation (CPSF), noted on July 18 that the decline is linked to the falling market price of pepper despite a normal level of pepper production. This has resulted in some farmers suspending sales and drying the pepper, awaiting a rise in price before selling.

“The challenge isn’t new. The price of pepper dropped post-harvest. As a result, some farmers dried it, anticipating a price increase,” he said.

He added that weather-related challenges have led some farmers to abandon their crops, which could trigger a decline in pepper production this year and the next.

New markets are crucial for Cambodian pepper as it would lure more investors to grow and export pepper to countries beyond Vietnam, he emphasised.

“In ASEAN, Vietnam is a major buyer of Cambodian pepper. However, despite various regional and bilateral free trade agreements, tariff barriers and phytosanitary issues persist,” added Mak Ny.

Nguon Lay, president of the Kampot Pepper Promotion Association, observed that although there’s no official data on pepper exports, he assesses that Kampot pepper exports haven’t fluctuated in the first half, mirroring last year’s trends.

Despite the global crisis, demand for Kampot pepper remains steady, particularly from European buyers.

“Kampot pepper has not encountered significant issues. We have contracts with purchasing companies and export approximately 70 to 80 tonnes annually. The weather did not diminish the quality of the pepper as our farmers are prepared, particularly in managing water supplies in response to climate change,” he said.

However, the high maintenance costs associated with growing Kampot pepper have forced some farmers out of business, reducing the association’s membership from 460 to just over 350 households.

Cambodia exports pepper to a wide range of countries, and pepper is grown in 18 provinces across the nation, including Mondulkiri, Ratanakkiri, Tbong Khmum and Kampot.

https://www.phnompenhpost.com/national/pepper-trade-hit-global-downturn-h1-ministry

A PRELUDE TO CLOVE MARKET 2023-2024

 July 16, 2023

TAMATAVE, Madagascar, 14 July 2023:-
The recent up & down swing in Clove price might have surprised many.
Not every one.
Clove has now become a complete industrial agri commodity. Even though its culinary uses everywhere increasing, but still, its consumption in the kitchen has a limit. Whereas industrial use is doubling up. It is not only Clove, but its various forms like Clove stem, Clove dust, Clove Oil, Clove leaf oil etc has very high industrial demand in the present day world.

A good % of global population use cigarettes; Smokers are not rare. But many smokers [and non-smokers also] may not be knowing the massive use of Clove in cigarettes. Of course, it is limited to Indonesia. Indonesian "Kretek" cigarettes [unfiltered cigarettes made of tobacco, clove and other flavours] uses more than 120,000 Mt clove every year - and thereby the world's biggest user of Clove.

Indian requirement - which is the single 2nd largest consumer in the world - after Indonesia - is yearly 26,000 Mt. See the difference of quantity consumed between the 1st biggest consumer and 2nd biggest consumer ! There is no other single country in this world consuming so much quantity of Clove.

Because of this, India and Indonesia are the two strong destinations who decide Clove price. Among this, Indonesia's role in price fixing is limited, as Indonesia is the world's largest producer of Clove with almost 140,000 Mt annually. Therefore, Indonesian cigarette companies gets their full requirement indigeniously - well from within Indonesia. Thereby, usually, there was no need for Indonesia to import cloves.

However, recently in last 2 years, scenario changed. Indonesian clove production declined, and it is reported last two years, its production was below 100,000 Mt, thereby making the cigarette companies to import clove from either Brazil or Africa. And in 2022 and 2023, again clove production declined in Indonesia, and it became inevitable for Indonesia to import around 25,000 Mt clove from Africa and Brazil. And it is reported from Indonesia that during 2023-2024, Indonesia cigarette companies might be forced to import 30,000 to 40,000 Mt for their use.

During 2022 and early 2023, reports from Singapore Traders reveals that Indonesia imported full quantity of Clove from Zanzibar, and 40% of Comoros Clove, and more than 5000 Mt from Madagascar as well; and many traders in Singapore even now carrying stock with them on the hope of import by cigarette companies. The recent upside price movement in African origins and Indian market as well as Dubai market substantiate this reports, and the demand of Indonesia. In Madagascar, the local sale price moved from Ariary 30,000 per kg to Ariary 33,000 and then to 36,000 and further jumped to 38,000, and even people firmly asking for Ariary 40,000 per kg. This uptrend was followed in India also, where local whole sale market moved from INR 750 a Kg to 820 a kg and then to 860 a kg and finally reached INR 980 a Kg. Retail market [in grocery shops and super markets] in India jumped to even INR 2000 per kg ! In Dubai market, local whole sale marked moved from AED 33 to 36-38 level a kg. International market, which was around USD 8300 per MT on CNF basis, moved to USD 9800 per MT and crossed USD 10,000 also. Indonesia at a time quoted to the export market USD 10,400 also. But price above USD 10,000 could not sustain, and it dipped. On an average, one can see, international price was stable at around USD 9500 to USD 9800 per Mt.

However, in July 2023, surprising the whole market, the price line took a downside U Turn ! The cigarette companies in Indonesia stopped their purchase, and news came out that cigarette companies have enough stock in their custody for next six months consumption; and they are not in a hurry to import at higher price levels. Based on this news, Singapore traders, who were holding stock for the cigarette companies demand, started selling off their stock to Indian market, and they sold to Mumbai Vashi market even at USD 9600--9650 per MT, when international market was at a level of USD 9800 per MT !! Similar reduced offers were given to Dubai market as well. This reduced price offer by singapore traders to India created a panic in local Indian market also. In Indian local market, price dipped by INR 80 to 120 on a Kg. Dubai market witnessed dip of AED 1 to 1.5 on a kg. And whole sale market - from Indonesia offers came down to USD 9300 and USD 9000 also [but only one or two isolated offer at 9000 level] Madagascar offered USD 8900 -8800 on the down side; but in Madagascar majority of sellers kept away from the market. This was because of resistance from Farmers and Collectors in selling their stock to exporters. Both farmers and collectors/ stockists after tasting the higher price level, were holding back to demanding those higher levels and availability in the terminal market was low.

What could be possibilities in the new harvest season in 2023 ? All origins - Africa and Indonesia - crop is delayed. Comoros - the first harvest to come from Africa, normally in July, is delayed and now expected only by mid August. In Indonesia, July-August harvest is reported only half of normal harvest. Reports from farmers in growing islands says, many clove trees have no flower or buds, and no crop possible from such trees, thereby reducing total harvest quantity. Zanzibar is another African origin. As Zanzibar is monopoly by Govt Trading Corporation, and private exporters are not allowed there, we need to depend on Govt reports only. Like in 2022-2023 happened, this year - 2023-2024 also, Zanzibar State Trading Corporation is looking to make contract with single party for its whole quantity ! thereby restricting other buyers to enter. [In 2022-2023, Zanzibar Corporation sold its full quantity to a single trader from Singapore in one shot through a single sales contract.] From these, what we could derive ? what we could read for future? What would be guiding lines for the future market ?

Yes of course, as in the case of any industrial commodity, Clove also follows both fundamental and technical market equations. Clove price is also judged from both fundamental and technical factors. These days, some technicial factors influence fundamental factors !! That is the worst scenario in Clove, because of its limited sources, but massive spread consumer market. Fundamental factors are normal economic indicators - supply and demand is the prime; and FOREX is the second; Mind set of buyers and consumers and/or Sentiments of importers and consumers are also becoming fundamental factors as mind set and sentiments determine demand. What are technical factors influencing the market? - Market making, Speculation and Cycle Trading - which is manipulated factors and man created factors. It becomes technical as it directs Price Curve. When you look at Price chart, you can see price movements, zig-zags all goes with man made market making and speculative purchase and sale and stock holding coupled with cycle trading.

Fundamentally, during harvest season price has to come down. Openings must happen at lower levels. No doubt about it. How far lower possible to open - that is the only question to look for answer !. Will it go down as low as in previous years harvest period ? or will it remain in mid point considering the speculative demand ?

My personal view is that, only a traders perspective, no claim on guarantee, Clove price has to come down in August, September, October months. All harvesting origin may open lower only. Might be possible to open in and around USD 7000 or bit lower. We could have a more firm view on price opening during second half of August 2023. We need to wait and see that time.

Singapore has good carry over stock now. In India also sufficient carry over stock remains in the hands of many traders and stockists. There is no shortage of crop in the market. In Dubai also more than 400 Mt stock available. In MAdagascar, old stock is available plenty. If one not looks at color of the stock, then enough quantity is available in Madagascar. However, when new crop comes to the market, definitely traders would book new crop quantity. Fundamentally, price would come down only. Market making and speculative activities can hold the market temporarily upside for a short period. I do not think, like in Steel industry, or in Sugar industry - in Clove industry, there is no that much money muscle power people to carry on the market on higher side for a longer period. Therefore, fundamental factors must rule over speculative technical factors, and market would come down to real market terms.

Let us wait for second half August 2023 to have more news and see market vibrants in more detail. Till then, I wish all my followers and readers and good time of trading, and healthy reading of the market. For any personalised advice, please free to reach me  email gkumarks@gmail.com

GIRISH KUMAR K S

Gently offered by Ms Sandra Braz from Braco Trade Ltda

JUST A REMINDER
WE STILL HAVE SOME LOTS OF PINK PEPPER 2023 TO OFFER
CALL US IN ORDER TO ASSURE YOURS !

Vietnam pepper market update 10th July 2023 – Week 27.

 

In June 2023, Vietnam exported 21,209 tons of all kinds of pepper, 18,545 tons of black pepper, 2,664 tons of white pepper. Total export turnover reached 77.1 million USD, black pepper reached 63.8 million USD, white pepper reached 13.3 million USD, compared to May, the export volume decreased by 26.3%, the turnover decreased by 14.5%. The average export price of black pepper in June reached 3,440 USD/ton, white pepper reached 4,975 USD/ton, down 100 USD for black pepper and 48 USD for white pepper compared to the previous month.

Guatemala Allspice Pimiento Update

This weekend we received an update from our good supplier in Guatemala regarding next crop Allspice Pimiento

7/9/23 7:57 PM

We anticipated that the size of the 2023 crop would be slightly larger than the crop in 2022. However, the region has been affected by dry and hot weather (possible El Niño), leading us to revise our expectations. As a result, we now predict that this year's crop will be either equal to or slightly smaller than the previous one.

Additionally, El Niño has caused a slight delay in the crop's harvest. Nevertheless, in Guatemala, the crop has just begun. We have already started purchasing small quantities and hope to increase our purchasing volume in the coming weeks as more cargo starts to come out.

On the other hand, Honduras has already started buying Allspice from Guatemala, taking it to Honduras and exporting it with the origin labeled as Honduras.

As mentioned earlier, we are in the early stages of the crop, but we are observing significant interest and demand from customers, local speculators and exporters. These factors and the anticipation of a smaller crop have contributed to the initiation of Allspice prices at higher levels.

Since we are still at the beginning of the harvest, it is essential to exercise caution. Our indication for premium clean 2023 Allspice from Guatemala (not FAQ quality) is at USD 8.50/kg CIF.

We have already started accepting orders, and they will be processed on a first-come, first-serve basis at these price levels.

Please feel free to reach out to us for any further inquiries or to place your orders.

The 51st Annual Session and Meetings of IPC and International Spice Exhibition

 

Dear International Pepper Community Family,

The International Pepper Community (IPC) holds regular Session and Meetings yearly which is hosted by the IPC member country on a rotation basis. Each member country is represented by a delegate with plenipotentiary authority to the Session. This year, the 51st Annual Session and Meetings of IPC and International Spice Exhibition (51st IPC ASM ISE) will be hosted by the Government of Malaysia and jointly organized by the Ministry of Plantation and Commodities (MPC), Malaysian Pepper Board (MPB) and IPC at Pullman Hotel Kuching, Sarawak, Malaysia from 6 - 9 November 2023.

As such, IPC take upon the theme of "Balancing the Global Pepper Supply and Demand - Alleviating Pressure on Prices" for the 51st Annual Sessions and Meetings of the International Pepper Community. The 51st ASM ISE is expected to be one of the largest ever conferences of the International Pepper Community.

Don't miss out this opportunity and I hope to see you in Kuching, Sarawak soon!

#togetherwearestronger

REGISTER NOW

Thank you and kind regards. 

Pepper exports fall as speculators shift money into coffee

 

Vietnam’s pepper output is high this crop, at 200,000 tons, but exports in the first five months of the year fell sharply as speculators reserved money to buy Robusta coffee.
The General Department of Customs (GDC) reported that Vietnam exported 131,500 tons of pepper and had an export turnover of $406.5 million dollars, a decrease of 11.6 percent in quantity and 33.2 percent in value compared with the same period in 2022.
The average export price in May was $3,106 per ton, a decrease of 1.6 percent compared with April and 31 percent compared with May 2022. In the first five months of the year, the average export price of the product called ‘Vietnam’s black gold’ was just $3,092 per ton, down 33.2 percent compared with the same period last year. 
The exports to most key markets dropped sharply in the first five years. The five largest markets, including the US, UAE, India, Germany and the Netherlands, all saw decreases of 34-57 percent.
Of the top 10 key markets, only Turkey and Egypt saw sharp three-digit growth rates, 165 percent and 160 percent, respectively. However, export turnover to the two markets account for a small proportion of Vietnam’s total exports.
The international pepper community has warned that the global market will remain lackluster. The slow global economic growth and weak demand from the US and Europe will hinder price increases. Meanwhile, speculators are injecting money into Robusta coffee rather than pepper.
Vietnam is the leading country in terms of pepper output. In 2022, Vietnam exported 220,000 tons, accounting for 55 percent of total pepper output in the globe. The world’s market slump will affect Vietnam’s pepper exports. 
Vietnam’s black pepper on June 24 was traded at $3,500 per ton in HCM City (500g/l), $3,600 (550g/l), while white pepper was $5,000 per ton.
In early June, the black pepper price dropped sharply in the domestic market compared with late May 2023 due to weak demand from the US and Europe. The price has slightly decreased, now hovering around VND69,000-72,000 per kilogram.
American and European importers have come back to the market, but they have not made deals as they are still waiting for the harvest crop in Indonesia.
According to the Vietnam Pepper and Spices Association, pepper output in the 2022/2023 crop is expected to increase by 10 percent to 200,000 tons. However, as many farmers have chopped down pepper to grow fruit trees, short supply may occur in three years.

https://vietnamnet.vn/en/pepper-exports-fall-as-speculators-shift-money-into-coffee-2160124.html

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China remains Vietnam's top pepper export market

 

Vietnam has exported 2,657 tonnes of pepper to the Chinese market as of mid-June. Exports to US and EU markets have dropped.
According to preliminary data from the Vietnam Pepper Association (VPA), Vietnam exported 11,305 tonnes of pepper in the first 18 days of June, and the total export value reached $41.1 million.
China remains the top export market for Vietnamese pepper, with exports reaching 2,657 tonnes in the first 18 days of the month. The leading exporters are Nedspice Vietnam, Olam, and Pearl Group Corporation, with respective exports of 1,045 tonnes, 738 tonnes, and 670 tonnes.
Asia was the biggest destination for exports in the first five months of 2023, reaching 78,907 tonnes and accounting for 59.9 per cent of total export turnover, with China being the largest export market with 46,169 tonnes, accounting for 35 per cent and growing 1,668.9 per cent compared to the same period in 2022.
In contrast, imports of Vietnamese pepper into the Americas and the US fell by 13.1 per cent and 15.5 per cent, respectively. The EU region decreased by 9.4 per cent during the same time period. Currently, 16.8 per cent of Vietnam's total pepper export revenue comes from the EU.
"Buyers in this region have a strategy of anticipating more new crops from Indonesia (July–August) and Brazil in the hopes that the purchase price might decrease," said Hoang Thi Lien, VPA president.
"In addition, purchasers from the EU and the US have not rushed to enter the market in the past five months due to the abundance of inventory from prior years," she said.
Lien explained that Brazilian pepper has always been more competitively priced than Vietnamese pepper, but due to the issue of contamination from Salmonella on the EU market, Vietnamese products continue to have an edge on this market.
"Recently, in an effort to diversify markets, pepper from Brazil has begun to appear in the Middle East and Africa at lower prices than pepper from Vietnam, thanks to benefits in logistics and geographic location," Lien said.
The VPA advises domestic businesses to closely evaluate their financial capacity prior to signing contracts for large quantities, long-distance delivery, and low pricing and to be proactive in identifying new markets in the future.

VIETNAMNET GLOBAL

22/06/2023   16:01