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Lower global availability coupled with delayed harvesting in
domestic physical market is supporting the Pepper prices to remain
firm. Global Pepper production is expected to dip by 2% and is
projected at 3,09,952 tonnes in 2011 as compared to 3,16,380
tonnes in 2010. Carryover stocks are expected to decline marginally
to 94,582 tonnes in 2011 as compared to 95,442 tonnes in 2010.
Erratic rainfall in some of the major producing areas and creepers
suffering from the wilt disease led global production to be reduced
to around 2 percent. This season production in the two major
growing nations such as Vietnam and India is expected to decline
by around 13 and 8 percent respectively.
Indian Pepper production is lower on account of wilt disease and
farmers shifting to other remunerative crops such as coffee and
rubber. According to Spices Board, Pepper production in 2010-11
is expected to decline to 48,000 tonnes from 52,000 tonnes the
previous year. Consumption of Pepper in India is around 45-46
thousand tonnes. This has made India to slip to the fourth position
in the global pepper export mart. Indian pepper exports in January
to December 2010 declined to 21500 tonnes from 25250 tonnes
the previous year.
Vietnam again stood as the leader in the global market, exporting
around 1,16,000 tonnes in 2010(according to its Ministry of
Agriculture and Rural Development). However, exports from Vietnam
registered a decline of around 13.3 percent year on year. Indonesia
and Brazil took second and third place exporting around 46000
and 25000 tonnes of pepper respectively in 2010.
Lower consumption in the other major producing nations
particularly Indonesia and Brazil and increased production has
made them to surpass us (India). The other reason attributing to
more exports in these nations is the lower price quotes offered in
the international market. If the pepper prices of the Indonesia,
Vietnam and Brazil are quoting lower with a difference of around
$200/tonne from the Indian pepper quotes overseas buyers tend
to shift to cheaper destinations.
Indonesia, therefore stands as the major supplier of whole black
pepper to U.S. in the period January to October 2010. According
to a report by the International Pepper Community(IPC), U.S imports
stood at 42,461 tonnes a rise of around 7% year on year. Indonesia
was able to export sizeable quantity of around 18,577 tonnes to U.S.
Price Trend: In the domestic market pepper prices this week traded
lacklustre due to weak overseas and domestic demand. Prices in
the February futures after touching a high of Rs.23,749/qtl (on 01
January 2011) dipped to lows of 22,505 tracking sluggishness in
the physical market. Price trend in the spot mandi in Kochi and in
futures is shown below:
Outlook: Black Pepper prices in the short term may remain range
bound with slight firmness as the harvesting is delayed owing to
unseasonal rains in the month of November and December. If, the
arrivals in the domestic mandis pick up prices may be pressurized
from trading higher. Arrivals which usually commence in the end
of December have been delayed and are likely to commence shortly.
Prices in the international market of all the major origins are
presently quoting at the same levels of around $5,050/tonne. This
might drive overseas buyers to India. Fresh arrivals from Vietnam
will commence in the month of February. Also, they are left with
lower carryover stocks after exporting major portion from their
supplies of 2010 thereby helping prices to find support and
strengthen in the medium term (February onwards).
In the long term (March onwards), prices may depend on the
production estimates of Vietnam and Indonesia and stocks lying at
their end. Demand from the domestic and overseas buyers may
also drive the prices in the long term along with price quotes of all
the major origins particularly India, Vietnam, Indonesia and Brazil.
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