Pepper prices tad lower on lack of trigger
Pepper prices are down by over a percentage point in the domestic market with low demand as the domestic rates are higher compared with the price in global markets.
By Deepa Krishnan, TNN |
MUMBAI: Pepper prices are down by over a percentage point in the domestic market with low demand as the domestic rates are higher compared with the price in global markets.
The pepper market has been highly volatile in the last month, and is currently quoting at an average of Rs 14,000 to Rs 14,200 per quintal.
In the futures market, the near month contract of pepper closed at Rs 13,896 per quintal from Rs 14,090 on Monday. The price is down by about 8% in the past two weeks. According to Jojan Malayil, a spice trader from Kerala, the Indian price is currently much higher than the international prices, which is encouraging speculation.
“In the months of July to September, the Indian futures market was quoting much lower than the physical market. This made it easier for traders to buy in the futures market and sell in the spot market. It was also proving lucrative for exporters,” Mr Malayil said.
However, currently, the Indian price is at a premium to international market, so there is no demand globally. The domestic demand is also low due to high prices, he said. The Indian price is almost $400 per tonne higher than global average price. The current price in India is $3,700 per tonne.
Analysts indicate that the domestic price is likely to remain on the higher side, with the monsoon delaying fresh arrivals by a month. Usually, the arrivals begin in December, but this season, a delay is being projected due to rains in growing areas of Kerala, and arrivals are expected from January onwards, said Faiyaz Hudani of Kotak Commodities.
The international market is also expected to fall short of pepper crop this year.
The local production for the upcoming season is pegged at 50,000 tonne, which is the same target set last year. This is about 20% of the total global pepper crop expected in 2008.
The pepper market has been highly volatile in the last month, and is currently quoting at an average of Rs 14,000 to Rs 14,200 per quintal.
In the futures market, the near month contract of pepper closed at Rs 13,896 per quintal from Rs 14,090 on Monday. The price is down by about 8% in the past two weeks. According to Jojan Malayil, a spice trader from Kerala, the Indian price is currently much higher than the international prices, which is encouraging speculation.
“In the months of July to September, the Indian futures market was quoting much lower than the physical market. This made it easier for traders to buy in the futures market and sell in the spot market. It was also proving lucrative for exporters,” Mr Malayil said.
However, currently, the Indian price is at a premium to international market, so there is no demand globally. The domestic demand is also low due to high prices, he said. The Indian price is almost $400 per tonne higher than global average price. The current price in India is $3,700 per tonne.
Analysts indicate that the domestic price is likely to remain on the higher side, with the monsoon delaying fresh arrivals by a month. Usually, the arrivals begin in December, but this season, a delay is being projected due to rains in growing areas of Kerala, and arrivals are expected from January onwards, said Faiyaz Hudani of Kotak Commodities.
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The international market is also expected to fall short of pepper crop this year.
The local production for the upcoming season is pegged at 50,000 tonne, which is the same target set last year. This is about 20% of the total global pepper crop expected in 2008.
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