Pepper mart likely to be hot

Global market remains strong now as Brazil, Indonesia and Vietnam quoting higher tags

As the global stock of pepper is shrinking, especially in Vietnam, the prices are likely to be strong for the rest of the current year. 

Although the Indian market has seen a fall in prices for the last couple of weeks, the global market remains strong now as Brazil, Indonesia and Vietnam are quoting higher tags.

The local farm gate price was dropped to Rs 700/Kg from Rs 750. This is because of the lower stock in Vietnam, world’s largest exporter, rather steady crop in Brazil and lower output from Indonesia.

India had seen a steep rise in imports during last couple of months, from Sri Lanka and major local markets were flooded with cheaper Sri Lankan pepper.

This is the main reason for the fall in prices in major domestic markets. Local traders, especially of Delhi and Mumbai, had taken the advantage of concessional duty (12%) import from Sri Lanka and imported roughly 600 tones.

Brazil, where harvesting is active now offers $10,000 tones, is the fancy destination of buyers from Europe. It is estimated that the crop in Brazil is in a range of 30,000 -32,000 tones in this season.

According to leading exporters Indonesia is having a lower crop this time, ranging from 15,000 -22,000 tones. So Indonesia quotes higher price of $10,400 -10,500/tone. For White pepper Indonesian offer is US 14,000/tone.

According to the latest export data of Vietnam Pepper Association (VPA) the country had shipped 120,662 tones during January – July period of this year. This indicates a smaller stock there and according to estimates the available stock would be 15,000 -20,000 tones.

The fresh crop season begins only by next January. So Vietnam quotes higher tags, ranging from $10,200 -10,250/tone. India which has exported roughly 1000 tones of Indian origin pepper during April – July period now offers US 12,500/tone.

So the global market parameters negate a serious fall in prices in both black and white pepper marts. Market is likely to move stronger as supply is limited for the rest of the year. Experts told Business Standard that demand will also be slow as a major chunk of European and US buyers had stocked pepper.

Meanwhile, Vietnam Pepper exports reached 120,662 tones, comprising of 109, 099 tones of Black pepper and 11,563 tones of White pepper in April – July period.

According to local exporters India’s export in the same period comes close to 10,000 tones during the period. Spices Board does not release the official data on exports as India’s position is weak in the world market. Moreover, India is importing pepper in bulk from origins like Vietnam and Sri Lanka.

It is interesting to note that other producing countries like India (8021 tones), Indonesia (2854 tones) and Malaysia (1303 tones) have become regular buyers of Vietnam.

Singapore has emerged as a major trading Hub (12,861 tones) and their imports stood more than the combined imports of Netherlands ( 7251 mts) and Germany (3746 mts) during January –July period.

The United States has been the biggest importer with 24,481 tones, which is 20.2% of Vietnam’s total export.