Global pepper prices might rise 6-7% in coming week

Global pepper prices are likely to rise six-seven per cent in the coming week, when markets in Vietnam open for trade on Monday, after the Chinese New Year holidays. Vietnam is the only country at present with stock.

Some exporters here expect a 10-per cent increase in prices next week. According to them, production in Vietnam is lower than the earlier projections.

Reports suggested Vietnam’s total output was likely to be 125,000 tonnes. But, latest estimates indicate it would be 105,000 tonnes only. Some expect it to be even lower. The lower output, coupled with poor supply from other producing countries like India, will push prices up by six-seven per cent. Before the holidays, Vietnam quoted $6,050 a tonne for 500 gm/litre grade, $6,300 for 550 gm/litre and $6,700 for the Asta grade of pepper.

Currently, India is out of the global market, as it offers $7,200-7,300 a tonne. Also, Brazil, Indonesia and Sri Lanka are not in the picture. So, for now, Vietnam is the only destination for buyers. It is expected that Europe and the US will be active in the market by next week, as most of their stocks were exhausted on Christmas-New Year demand.

The market is poised for a strong bull phase by June-July as Vietnam’s stocks exhaust in the next four-five months. India’s domestic demand may be met through local produce. So, the global supply will be tight by June-July. Hence, a price rise is inevitable, according to experts. For now, there are no indications from Brazil and Indonesia about any production.

According to reports, production in Kerala and Karnataka, which contribute more than 80 per cent of the total output, would be low. Production in Kerala is likely to fall 50 per cent. According to leading local traders, stock produced in Karnataka would be used for domestic consumption. Benny, a farmer from Idukki, a key producing district of Kerala, said in some parts of the district, production fell 60 per cent. And, the recent price increase would hardly benefit producers, as the output is too low.