Although pepper prices in Malaysia have softened in the past few months, prices may decline further as key pepper producing countries begin to harvest new pepper crops.
Now Indonesia has entered the second month of a new harvest that will last about four months, while Brazil will also bring new crops to the market, expected in mid-October or November, Mr. Lo Kun Seng, CEO of a leading Malaysian export company, said.
Reply to newspaper Malaysian Star“From here until the end of the year, pepper prices are likely to drop to around 5-7% from current levels,” Mr. Lo said.
However, Mr. Lo also predicts that the pepper market will remain stable in the second half of the year as world demand continues to outstrip supply. Indonesia and Brazil are two countries in the Top 5 leading pepper producing countries in the world.
Sarawak, the largest state, accounting for 95% of Malaysia’s pepper production, is now entering the final stage of this year’s pepper harvest. Malaysia’s crop usually starts in May.
In Kuching, the capital of the state, yesterday white pepper was priced at RM25,500/ton and black pepper at RM16,380, down about RM500/ton from April prices.
The price of white and black pepper has increased strongly in the past two years due to tight global supply and increased consumption in producing countries.
Last year, Malaysia’s domestic pepper price increased impressively, white pepper peaked at RM27,550/ton and black pepper peaked at RM17,850/ton, closing the year at RM24,850/ton white and RM15,600 /ton of black pepper. Thus, in 2011 the price of white pepper increased by RM5,350/ton, equivalent to an increase of 27% and the price of black pepper increased by RM3,500/ton, equivalent to an increase of 29% compared to 2010.
After the exchange rate stabilizes, the pepper market will cool down, and farmers and traders will not be in a hurry to sell at the current price. “They are holding a significant amount of stock and are waiting for the price to rise. The demand of the import markets is still high. The euro area’s public debt crisis has also had little impact on world pepper prices. Mr. Lo commented.
According to the 2012 forecast of the International Pepper Community (IPC), world pepper production will increase by more than 21,755 tons, or 7.3%, from 298,400 tons last year to 320,155 tons, while it is forecast Global consumption is expected to increase by 7,550 tons from 363,450 tons last year to 371,000 tons.
Therefore, the world will be short of nearly 51,000 tons of pepper this year.
Vietnam is the world’s leading pepper producer, accounting for one-third of global output. The country recently introduced black pepper to futures trading on the Singapore Mercantile Exchange (SMX) for the first time.
Regarding Malaysia’s pepper production this year, Mr. Lo said, the new harvest may not be as expected due to high fertilizer prices and lack of care workers in rural areas. Besides, some pepper trees are already old and need to be replaced.
Giatieu.com
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