Spot prices and spot prices in India were available The downward trend in the past week after the demand-supply difference was far higher than before.
Domestic demand weakened last week due to cold weather in the northern states.
A similar situation in the international market is also possible due to the severe cold weather in the US and Canada. This phenomenon is said to have caused a negative impact that business activities in India, the US and Canada markets in turn narrowed demand.
Much of the domestic demand is met by dealers in Tamil Nadu, based on traders who have made Erode a major center of pepper trade. The more favorable taxation in Tamil Nadu has enabled traders to actively buy pepper with cash and transport it from Kerala. Meanwhile, quite a lot of pepper has been sent by rail to northern Indian markets.
The majority of Kerala pepper with moisture up to 18% was traded at Rs 470 / kg. Higher quality pepper was sold at Rs 505 a kg earlier this week, now down to Rs 495 a kg.
On average, more than 10 tons of new pepper are transported by rail because of the long transport time. Maximum time sent by rail is about three days. Due to the high humidity of the new pepper crop, traders want to buy as soon as possible to avoid being destroyed by fungi.
Traders in Bihar and Jharkhand have also actively subsidized prices from major markets “on self-purchased invoices” in cash and shipped themselves, according to market sources.
On NMCE, January and February contracts for the week decreased by Rs 1,358 and Rs 1,612 to Rs 51,467 and Rs 51,200 respectively. Turnover increased by 31 tons to 115 tons. Open interest dropped by 7 tonnes to 18 tonnes.
On IPSTA, January and February contracts dropped sharply by Rs 3,500 and Rs 5,000 during the week to close at Rs 49,000 and Rs 46,518.
Spot prices plummeted to Rs 1,200, closing Saturday at Rs 48,900 a quintal (pint) and Rs 50,900 a quintal (selected option).
Essential oil extracters have to buy the unfinished peppercorns due to cheaper pepper available from Sri Lanka and Vietnam. Exporters committed to deliveries in January have also been slowed down.
In the meantime, investors whose pepper was released from stock were offered at reduced prices but paid in advance. Supply from high mountain ranges is likely to increase. When all the factors are put together, the market may tend to be easier in the coming days.
Indian export prices were at 8,450 – 8,500 USD / ton (c & f) in Europe and 8,700 – 8,750 USD / ton (c & f) for the US.
International markets
In recent weeks, Vietnam's pepper market has had a significant change. While other manufacturers such as Brazil and Indonesia are still tight and prices have not seen a decline, prices in Vietnam are plummeting, according to a report from abroad.
The main reason for this sharp decline is attributable to some key growing provinces in southern Vietnam and Dak Nong province in the Central Highlands that started the harvest. Most of the new farmers' areas in the provinces in recent years have been converted to early pepper cultivars.
Harvesting began in early January, leading to additional supplies and lower prices. Pepper prices are now very high, and many farmers are willing to convert their crops more and more, so the selling pressure has also weighed on.
The Lunar New Year is about to begin, and some anticipated profits are happening in the market. According to the report, the current weakening prices may not continue after the new crop is abundant and there may be price resistance occurring after the Lunar New Year holiday.
Prices have not recovered in the short term, as most buyers will only return to the market by the end of February / early March. This will definitely create some price pressure. After that, the market will stabilize around April, and like most years ago, a range of price ranges between April and June could be expected.
At this stage, “we do not see the possibility of a significant reduction from the current level. By the end of the second half of 2014, depending on the size, production of Indonesia and the Indonesian shippers ready to sell, we can see that at that time prices will fall for a while. We, therefore, recommend insurance (up to about June) for our customers at this stage. Based on the information on Indonesian production, the forward purchases from June onwards can be planned between April and May of 2014, ”said a foreign market source.
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