Pepper set to turn hot as sellers hold stocks
Availability of pepper could well be an issue when demand for pepper picks up in the winter season considering that stocks have fallen to levels not seen before.
By NIDHI SHARMA, |
MUMBAI: Availability of pepper could well be an issue when demand for pepper picks up in the winter season considering that stocks have fallen to levels not seen before.
Even though prices are high, there are no sellers in the market, according to traders. During the winter season, local demand is estimated to range between 3,000-4,000 tonne of pepper every month but stocks are now down to approximately 20,000 tonne.
According to Jojan Malayil, a Kochi-based pepper trader, who also exports value added pepper products, even the existing stocks may not be available easily as the farmers and dealers may hold their stocks in anticipation of a further rise in price. Mr Malyalil said that pepper price of farmgate commodity is currently hovering around Rs 140 per kg which may further go up to Rs 160 on tight supplies and latent demand.
The low stocks are due to a significant rise in exports over the last seven to eight years on account of competitive prices. In the last 18 months until August 15, India exported 50,000 tonne of pepper. ���We always had one season���s crop as stocks but this time due to high exports the domestic stocks position is alarming,��� said Mr Malayil.
Currently Indian prices are at a premium of $300-500 compared to all the major markets. Brazil is offering its Asta grade pepper at $3,000 per tonne FOB (free on board) while Indian pepper quotes at $3,500. Even pepper from Vietnam is cheaper at $3,350. Indian manufacturers and exporters of value added pepper have also entered the global markets due to the price difference.
On the commodity exchanges, the stocks are low at approximately 7,500 tonne compared to the same time last year. The volumes at the exchanges are also low and the price of the futures contract is at a discount to the spot market.
The September contract on NCDEX has been trading between Rs 13,900 per quintal and Rs 14,800 since past one month. Whenever the contract moves up there is selling pressure which pulls the prices back. According to Faiyaz Hudani of Kotak Commodity Services fundamentals for the commodity are strong and if there is good demand in coming weeks prices can move up.
On Tuesday the most active September contract on NCDEX closed down 1.4% at Rs 14,325 per quintal. In Kochi spot market, the price for the NCDEX traded variety is between Rs 14,400 per quintal and Rs 14,600.
Even though prices are high, there are no sellers in the market, according to traders. During the winter season, local demand is estimated to range between 3,000-4,000 tonne of pepper every month but stocks are now down to approximately 20,000 tonne.
According to Jojan Malayil, a Kochi-based pepper trader, who also exports value added pepper products, even the existing stocks may not be available easily as the farmers and dealers may hold their stocks in anticipation of a further rise in price. Mr Malyalil said that pepper price of farmgate commodity is currently hovering around Rs 140 per kg which may further go up to Rs 160 on tight supplies and latent demand.
The low stocks are due to a significant rise in exports over the last seven to eight years on account of competitive prices. In the last 18 months until August 15, India exported 50,000 tonne of pepper. ���We always had one season���s crop as stocks but this time due to high exports the domestic stocks position is alarming,��� said Mr Malayil.
Currently Indian prices are at a premium of $300-500 compared to all the major markets. Brazil is offering its Asta grade pepper at $3,000 per tonne FOB (free on board) while Indian pepper quotes at $3,500. Even pepper from Vietnam is cheaper at $3,350. Indian manufacturers and exporters of value added pepper have also entered the global markets due to the price difference.
On the commodity exchanges, the stocks are low at approximately 7,500 tonne compared to the same time last year. The volumes at the exchanges are also low and the price of the futures contract is at a discount to the spot market.
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The September contract on NCDEX has been trading between Rs 13,900 per quintal and Rs 14,800 since past one month. Whenever the contract moves up there is selling pressure which pulls the prices back. According to Faiyaz Hudani of Kotak Commodity Services fundamentals for the commodity are strong and if there is good demand in coming weeks prices can move up.
On Tuesday the most active September contract on NCDEX closed down 1.4% at Rs 14,325 per quintal. In Kochi spot market, the price for the NCDEX traded variety is between Rs 14,400 per quintal and Rs 14,600.
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