Malaysia: Average price of white pepper surges more than 10% to RM21,530 per tonne

KUCHING: Pepper prices are soaring, boosted by the tight supply globally as farmers hold back their stocks in anticipation of higher prices.

The average price of domestic white pepper surged to RM21,530 per tonne on Tuesday, an increase of RM2,030 per tonne, or more than 10%, compared with 2010's highest closing price of RM19,500 per tonne. The price broke the RM20,000 per tonne mark early last month.

White pepper prices had enjoyed a good run and surged by about 27% last year.

The average price of black pepper hit this year's new high of RM13,400 per tonne yesterday, which was up by RM1,300 per tonne or nearly 11% from the closing price of RM12,100 last year. In 2010, black pepper soared by nearly 30%, from RM9,350 per tonne recorded in 2009.

White and black pepper hit their historical highs of RM28,000 and RM16,000 per tonne respectively in 1999.

From those peaks, they nosedived to RM6,500 and RM4,000 per tonne respectively five years later before making a strong recovery in 2006. Malaysian Pepper Board director-general Grunsin Ayom said farmers in India and Brazil, the world's second and fourth largest producer respectively, had been holding back their stocks, hoping to sell at better prices later.

He said some local farmers, who were economically better off, were also waiting to sell their stocks into the price rally.

“As they are in no hurry to sell, this has resulted in a tight supply, thus pushing up the prices further. It is a seller's market. The global supply of coffee, as well as other spices, are also in a tight situation,” he toldStarBiz yesterday.

Grunsin said China, which imported some 1,850 tonnes of pepper from Malaysia last year, was buying more of the commodity this year.

The International Pepper Community (IPC), of which major producing countries are members, has forecast that world production in 2011 would dip by about 2% to 309,950 tonnes, from an estimated 316,380 tonnes harvested last year.

It has projected an estimated global shortfall of some 45,000 tonnes this year.

Grunsin said Vietnam, the world's No. 1 pepper producer, had just harvested between an estimated 90,000 and 100,000 tonnes, which was close to one third of global production.

“Some of these new (harvests) are already in the market,” he noted. Asked if the current price uptrend could continue or be sustained, he replied: “That is anyone's guess.”

Pepper is increasingly used as an ingredient in food processing, and domestic consumption had gone up steadily over the years.

Malaysia, the world's fifth largest pepper producer, exported an estimated 14,040 tonnes worth RM190mil last year, up from 13,122 tonnes valued at RM156mil in 2009.

There are more than 14,100 ha of pepper farms in Malaysia, of which 14,000 ha are in Sarawak. The other pepper-producing states are Johor and Sabah.

(Source: http://biz.thestar.com.my/news/story.asp?file=/2011/4/28/business/8557076&sec=business)