Pepper prices may fall on poor demand

Pepper prices are likely to decline further, as India’s stand in the global market weakens due to its highest price.

Prices have dropped sharply since July 27 after hitting a 10-year high of Rs 220 a kg, and are currently hovering around Rs 198. According to experts, trends in the overseas and local markets indicate that prices may fall by another Rs 15 a kg in the next few weeks.

Demand in key states like Kerala and Karnataka is quite poor, as pepper prices are lower in Delhi, Mumbai and Jaipur. Sellers in Karnataka are seeking the commodity at a price of Rs 195-200 a kg, whereas pepper is ready for supply at Rs 202-207 (after adding the transportation cost) in the north Indian market.

Lack in the overseas demand, especially from the US and Europe, adds further pressure on prices. They have withdrawn from the market due to higher prices and huge inventory. Experts foresee a rather sluggish market for the next six-eight weeks. However, it is expected that prices may start rising again by mid of October.

Indonesia has become a hot spot in the global market, even though the European and US buyers are not much active. Indian MG1 is currently quoting at a price of $4,425 in the global market, while Indonesia offers it at only $3,950.

The misleading data on exports from Vietnam also affected the market sentiment, as it provides varied reports on the stock position of the country. Vietnam had already shipped 87,000 tones by July this year and is reported to have a stock of 25,000 tonnes. However, some reports indicate that the country hold stock of around 40,000 tonnes. Vietnam offers Asta grade pepper at a price of $4,000, while the asking rate is $4200 a tonne. The official rate of Brazil is also above $4,000, but the country sold pepper at $3,925-3,950 for the August shipment.

India also faces serious threat from Sri Lanka, where the harvesting season has just begun. The island nation has offered 525 gm/liter grade for August shipment at $3750 a tonne. Indonesia has offered its new crop at $4,150 a tonne for New York delivery.