Black Pepper rises on short covering

Spot pepper prices as well as futures after trading weak in the beginning of the week strengthened due to short coverings by the market participants and settled 0.58% and 1.38% higher on Friday. Fresh arrivals in the domestic market and lacklustre demand from the overseas and domestic buyers might pressurize the prices. Buyers in the domestic and overseas are following a wait and watch stance and waiting for the prices to stabilize. Fresh arrivals are expected to improve in the coming weeks.
Export of black pepper from India in April – December 2010 plunged 9% to 14000 tonnes as compared to 15425 tonnes the previous year.
.Production and Arrivals
Arrival of farm grade pepper has improved since past few days. Around 50-55 tonnes of new pepper arrived from various growing areas from 10-20 tonnes in the mid of January. But, pepper arriving in the market is of very low bulk quality.
Indian production is waning since the past few years due to old vines, static acreage, poor replanting and shift to other remunerative crops like rubber, cocoa and coffee. The average annual pepper production in India is 55,000 tonnes.
Production of pepper in India in 2010-11 is projected to be 48 thousand tonnes (according to the Spices Board) as compared to 50 thousand tonnes last year. India has slipped to the fourth position in the world pepper export mart due to decline in the production since the past few years.
In the international pepper markets too output is expected to decline this year. Black pepper production in Vietnam, the largest pepper producer, is likely to be lower by around 9 percent at 1 lakh tones as compared to 1.10 lakh tonnes in the previous year.
Outlook
Pepper prices in the intraday are expected to trade sideways to down owing to fresh arrivals and sluggish demand from the domestic and overseas buyers.
In the short term (till January), Pepper prices will depend on demand from the overseas and domestic market and fresh arrivals in the physical mandi in Kochi.
In the medium to long term (February onwards), price trend will depend on pepper stocks with major producers and Black pepper production estimates of Vietnam for 2011.

(Source: http://www.commodityonline.com/futures-trading/technical/Black-Pepper-rises-on-short-covering-21570.html)