The first transaction of the Singapore Commodity Exchange (SMX) was a minor impact on the Malaysian pepper market for the first time.
Malaysia's leading pepper exporter, LHC-SK Sdn Bhd, said forward contracts listed in Singapore directly affect Vietnam, the world's No. 1 pepper producer, but not to Malaysia.
LHC-SK is one of Malaysia's 4 largest exporters. The company exported more than 19,000 tons of pepper abroad in 2011, mainly to Japan, up sharply from about 15,000 to 18,000 tons a year earlier.
LHC-SK predicts that pepper prices will continue to be stable until May, when some countries enter the peak harvest. In the first half of this year pepper prices will remain high due to high demand. This year, the supply of pepper in Sarawak (where 99% of Malaysia pepper is produced) may decline.
Pepper prices in Malaysia are currently higher than prices in Vietnam due to the tight supply.
Kuching Grade 1 pepper increased by 1,400 ringgit / ton from the end of last year to 17,000 ringgit / ton, an increase of about 9%. The price of black pepper increased by 3,500 ringgit or 29% in 2011, and increased by 2,750 ringgit in 2010 compared to about 9,350 ringgit in 2009.
Kuching Grade I white pepper is currently trading at around 25,830 ringgit / ton, an increase of 980 ringgit or nearly 4% from 24,850 ringgit at the end of last year.
The introduction of pepper at SMX is aimed at creating a new reference price for the pepper market, which is mainly produced in Asia.
Pepper trading can be active around the end of April-May, when Middle East countries buy strongly before the festive season.
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