Pepper declines on weak domestic demand

Lacklustre trades at the domestic mandi led spot prices of pepper and futures to trade 2.65% and 4.45% lower w-w. Reports of commencement of fresh arrivals from Indonesia and expectations that the prices in the international market of major origins particularly Vietnam and Indonesia might be quoted at lower rates will pressurize prices.

In the month of April 2011 pepper prices in terms of fob highest rise was witnessed in Vietnam and Brazil origins. Prices rose by 22% and 21% respectively while that of India and Lampung it increased by 15% each, Malaysia by 13% and Srilanka by 4%.

Exports from the major countries

According to Spices Board of India exports of pepper from India during April 2010- February 2011 stood at 16,600 tonnes as compared to 18,425 tonnes in 2009-10, decline of 10%.

According to International Pepper Community (IPC) exports of black pepper from Indonesia during January to April 2011stood at 10,821 Mt (7025), increase of 54% as compared to previous year. Exports of Black pepper from Vietnam during January to March 2011stood at 25,000 MT, decline of 10% as compared to previous year.

According to General Statistics Office of Vietnam, the country has exported around 42,000 tonnes of Pepper during January to April 2011.

Production and Arrivals

Arrivals of pepper in the domestic mandi are in the range of 16-25 MT while are in the range of 15-20 Mt since couple of weeks.

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.

According to International Pepper Community (IPC) global output of Pepper for 2011 is expected to decline by 6,500 tonnes to 3.10 lakh tonnes. Vietnam production of the spice is expected to be same as that of previous year to 1.10 lakh tonnes. Pepper production in Brazil stood around 27,000 tonnes in 2010-11 as compared to 35,000 tonnes the previous year.

Outlook

Pepper prices are likely to trade sideways to down due to lackluster trades at the domestic mandis. In the short term (till mid of June) prices might be pressurized owing to fresh arrivals of pepper from Indonesia. Domestic prices will also take cues from pepper prices of Vietnam in the international market.

In the medium to long term (June end onwards), price trend will depend on pepper production in Indonesia and Brazil and demand from the overseas and domestic buyers.

Courtesy: Angel Commodities

Source: http://www.commodityonline.com/futures-trading/technical/Pepper-declines-on-weak-domestic-demand-23944.html