Pepper mart in trouble on low stocks

The four-week period beginning mid-January will be crucial for the global pepper mart specifically in India, as stocks in Vietnam and India are currently on a squeezing trend.

The Vietnam market will remain closed for around 15 days commencing from January 22 on account of Chinese New Year celebrations. Therefore, some buying interest from North America and Europe is expected for fill up demand and the local pepper trade is hitching high hopes.

According to reports from Vietnam, the country is having a stock of 17,000-20,000 tonnes and all export houses will remain closed for two weeks. As a result, India will become the central point of world trade of pepper, said leading exporters.

The US importers had shown some interest in MG1 after New Year holidays, but backed out due to the higher price tags, India quoted. Europe is a silent spectator for the time being as economic recession badly hit the demand of spices there.

India enhanced the tag of MG1 to $2,550 a tonne but US buyers did not show any interest at this level. The market slightly depreciated to $2450-$2,475 and exporters expect US buyers to return once prices stabilise. There are buyers from the US who are willing to have coverage for entire 2009 at $2,300 a tonne for MLSV. A sharp mis-match in demand and supply is estimated this year as production in all major producing countries except Vietnam will be lower and carry forward stock is at a record low. So the global pepper market is not expected to be affected by the global economic turmoil.

Meanwhile, Vietnam which is following the trend in Indian market, has quoted $2,500 for Asta, $2,125 for 500 GL and $2,275 for 550 GL (all FOB- HCMC). The weak stock position and the estimated delay in the arrival of fresh crop is forcing Vietnam traders to have a tight hold on the priceline. The country projects a production of 100,000-105,000 tonnes for the 2009 crop season.