Pepper trades down on slack demand

Pepper spot prices and futures ended lower 1.60% and 4% respectively on Wednesday owing to slack demand from the domestic stockists and reports of fresh arrivals from Vietnam. There are reports that harvesting in Vietnam has commenced in small quantity and the prices offered by them in the international market for their 550Gl are around $4,500/tonne. Arrivals are likely to gain momentum by March.
According to International Pepper Community (IPC) report, export of black pepper from India during 2010(Jan- Dec) plunged 21.6% to 16,700 tonnes as compared to 21,300 tonnes in the previous year (2009). However, imports from the country surpassed the exports and stood around 18,000 tonnes in 2010 against 15,200 tonnes in 2009.
The report also stated that there are lower stocks of pepper in Vietnam till fresh arrivals which would commence in the month of February. Carryover stocks in Vietnam are around 5,000- 6,000 tonnes as compared to 35,000 tonnes 2009-10. (source: spot market traders).
Production and Arrivals
Arrivals of pepper in the domestic mandi were around 20 tonnes amidst improved offtakes 30 tonnes yesterday.
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. However, there are expectations that this estimate would be lowered further on account of the disease attacks and erratic rainfall in the major growing areas particularly Kerala and Karnataka.
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.
Pepper production in Brazil stood around 27,000 tonnes in 2010-11 as compared to 35,000 tonnes the previous year.
Outlook
Pepper prices in the intraday are expected to trade bearish on account of fresh arrivals of pepper from Vietnam, one of the major producer of pepper.
In the short term (in February), Pepper prices will depend on demand from the overseas and domestic market and fresh arrivals in the physical mandi in Kochi. Prices will also take cues from the production of Pepper in Vietnam, carryover stocks (Vietnam) and pepper prices in the international market of various origins particularly India, Vietnam, Indonesia and Brazil.
In the medium to long term (March onwards), price trend will depend on pepper stocks with Indonesia and demand from the overseas and domestic buyers.

(Source: http://www.commodityonline.com/futures-trading/technical/Pepper-trades-down-on-slack-demand-21993.html)