Slowdown ahead in global pepper market

A slowing demand from the Euro zone and the US, two major takers of pepper, is likely to have a negative impact on prices in the second half of the current year, say leading global traders and experts. Coupled with a steady supply of the commodity, this may pull down prices by $500-750 a tonne in the fourth quarter of the year.

According to information from various producing countries, the second half is likely to have a total supply of 146,000 tonnes. Indonesia is expected to have total production of 30,000-35,000 tonnes, Brazil of 40,000 tonnes and Sri Lanka estimates 16,000 tonnes. Reports from Vietnam put their probable stock ranges at 60,000-70,000 tonnes for the remaining part of the year. The country had already shipped 62,000 tonnes during January–March period and 12,228 tonnes in May. In sum, a supply crunch in the global pepper mart can easily be ruled out.

This comes, as mentioned, with a sharp fall in buying by European Union nations and America. US import this April dropped to 2,689 tonnes as against 4,075 tonnes in the same month last year. The cumulative figure for January–April was 12,279 tonnes against 14,855 tonnes in the same period of last year. Leading exporters say US import is likely to slow further, in a wait over there for the market to drop or stabilise. Likewise, the euro zone crisis has affected shipment to this region and is likely to continue doing so.

Experts rule out a glut in the market, as the cash- rich growers of Vietnam and Brazil can keep stocks in wait for a positive reaction. So, a section of experts believe there would not be a big fall in prices. Current prices in Vietnam, Brazil and Indonesia are high, at $6,500-6,900/tonne FOB. India is on top of the table with $7,400/tonne. All this points to a probable correction in the global mart.