Surge in pepper futures may not last beyond June

Harvesting of crop to be complete domestically and abroad in weeks.

The surge in the price of black pepper in the futures market over recent months shows no sign of coming down in the immediate future, though observers feel it can’t last beyond June.

The futures price per quintal was at an all-time high of Rs 30,208 yesterday; it was Rs 15,991 a year before. It may go even higher this month. “We still are bullish and see pepper reaching an upside of Rs 32,000 per 100 kg in the next one week on the futures market,” said Faiyaz Hudani, senior research analyst at Kotak Commodity.

This situation may hold till end-June, but not beyond, say observers. The new crop in Malaysia, Brazil and Indonesia would be ready in six to eight weeks. Vietnam is yet to market 65 per cent of its fresh crop. So, global supply is likely to increase during July-September. Overbought Indian pepper futures would burst unless overseas demand increases very sharply, said a trader in the spot market here.

Based on earlier reports that global supply would shrink, Indian futures took a speculative route. According to leading exporters, this was not in line with the reality and the increased supply will begin to impact the price line after a couple of weeks.

India has been a net importer since 2009. This year, with Indian prices staying high, more imports will come into the country, said experts.

Harvesting will be over by the end of this month in Kerala, Tamil Nadu and Karnataka. It has been completed in the new cultivation areas of Meghalaya and Assam, where the output has been a record 5,000 tonnes this time. This rise would partly compensate for an anticipated loss in production in Kerala and Karnataka. With a bullish view on prices, farmers have so far sold only 20 per cent of the fresh crop, or 10,000 tonnes, in the current season. Once the price begins to fall, much stock is likely to be offloaded.