Pepper prices are likely to rebound due to severe weather in Kerala and higher demand during the upcoming festive season, traders said.
Currently, the market wants to keep the minimum inventory and wait for the pressure to come from the crops of Indonesia and Brazil, so dealing with buyers is slow.
The Indian market has seen some imports from Sri Lanka finding their way into the domestic market. “The market was looking forward to pepper Indonesia and Brazil offer goods to push the market. Looks like they don’t have an output forecast. Vietnam sold 95,000 tons in the first seven months of 2013 and it doesn’t seem like they want to sell any more. I think the market will rebound on the short-term shortfall as traders want to fill the supply,” said Jojan Malayil of Kochi-based Bafna Enterprises. The Indian market could recover as festive purchases will start next month and pepper prices could recover higher, he added. Spot pepper price in the Indian market is currently above Rs 400 per kg.
The Indonesian crop is usually on the market in mid-July and the Brazilian pepper will also hit the market in August. Traders will buy heavily during September-October, which is considered the peak consumption season in the global pepper market. Countries like the US and Europe are also replenishing their inventory for Christmas and New Year celebrations, starting in September.
Kishore Shamji, a veteran exporter of spices, told The Financial Express that the International Pepper Community (IPC) estimate of a higher supply than in 2013 is wrong. “India’s pepper production is estimated at 55,000 tonnes, but I don’t think we have that much. Supply is tight in the Indian market and farmers are holding back due to extreme weather changes.”
Sri Lankan pepper is sold at a lower price and this has kept the market low for now, while the supply in the domestic market is limited, he added.
Heavy and continuous rains in the southern states are raising concerns about the growth of pepper plants. Pepper is highly sensitive and heavy rainfall can lead to low yield.
The Spices Research Institute of India conducts a research program on the relationship between climate and the yield of black pepper in case a prolonged drought or sudden heavy rain can drastically alter the two growing stages. The fruit can cause an increase in grain weight.
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