Black pepper prices turn hot on tight supply, high demand

KOCHI: Black pepper prices are inching towards the historic Rs 500 per kg mark in the spot market spurred by tight arrivals and good domestic demand. The garbled variety is selling at Rs 486 per kg in the Kochi market , which is the highest price so far. High prices have led to slackening of exports, which have been doing well this year.

The arrivals have shrunk to 20-25 tonne a day. If the export consignments go up, then the prices may touch the Rs 500 mark. “The bullish trend will remain for some time as the next pepper crop is expected only by December-January . There is a possibility of the prices touching the Rs 500 per kg level,’’ says Chowda Reddy , senior analyst, agri commodities , Inditrade Derivatives and Commodities .

Though official production estimate for 2012-13 is 55,000 tonne, the trade feels it would have been lower by about 5,000 tonne. With prices ruling at high levels, the growers are fast liquidating their stock. Around 6,300 tonne of pepper is locked up in the warehouses of NCDEX, seized by Food Safety and Standard Authority of India (FSSAI) on complaints of mineral oil adulteration.

Though a significant portion has been found contaminated, NCDEX and the trade have reportedly opposed its destruction . “Some dealers in Kerala have even started processing and are selling semi-processed pepper to Erode-based traders who send the consignments to North India,’’ says leading exporter Kishor Shamji. The dealers are taking advantage of absence of tax in Tamil Nadu. With elections coming up, the traders flush with funds from political parties in states like Bihar, Jharkhand , Madhya Pradesh, Rajasthan and Delhi are buying pepper. “These traders prefer cash and carry method and don’t want anything on account,’’ Kishor Shamji adds.