Black pepper prices may rise on supply shortage

The global black pepper market is poised for a bull run. In anticipation, market players are holding stocks to benefit from high future prices.

According to sources, growers in Kerala and Vietnam are expecting better prices in the June-July period and are therefore holding stocks, which has led to a shortage.

According to the latest estimates, Vietnam had shipped more than 50,000 tonnes by mid-May. Exporters have 10,000 tonnes, which has already been sold to major users in Europe and the US. The remaining 40,000 tonnes is with farmers.

The majority of global demand of the commodity is met by Vietnam. Thus, the selling pattern of farmers there will be crucial for the market. The total crop in Vietnam is estimated at 100,000-110,000 tonnes. It is offering the Asta grade variety of black pepper at $3,600-3,700 a tonne.

The global market will have to depend on the Vietnam stock till harvesting begins in Indonesia. The output in Indonesian is expected to be low and will hit the market by July-August. Brazil has sold a major part of its 2009 crop and has roughly 5,000 tonnes left. It is offering the highest price of $3,650-$3,700 a tonne. But, the market is facing a tough situation due to the economic turbulence in Europe, which has affected offtake by the countries there. The Indian offer of $3,775 a tonne is the highest. The reason: Strong local demand. The demand is mainly met from Karnataka as supply from Kerala is weak.