Pepper prices suddenly “danced” before a lot of turbulent information, while the export output factor did not change much.
In the last days of May 2020, pepper prices in the Central Highlands and the South increased and decreased suddenly.
Specifically, on May 27, pepper price jumped from 7,000-7,500 VND/kg, on May 28 pushed pepper price to 60,000-62,000 VND/kg. However, right after the shock increase, the pepper price on May 30 plummeted to the level of 50,000 VND/kg.
On the morning of May 31, the highest pepper price of 56,000 VND/kg was recorded in Ba Ria – Vung Tau, the lowest was 52,000 VND/kg in Gia Lai.
The price of pepper is unstable, making it difficult for exports
Mr. Nguyen Tan Hien, Vice Chairman of Vietnam Pepper Association (VPA), Deputy General Director of Tran Chau Import-Export Trading Service Joint Stock Company said that the story of pepper price increase happened on May 27. and by the morning of May 29, it was over.
Previously, the price of pepper from 38,000 VND/kg gradually increased to 42,500 VND/kg, then stopped, but then increased again to 48,000 – 49,000 VND/kg. At this price, the market started to panic with rumors, many big traders in the raw material area announced that “exporters are in need of goods, pepper prices will still be up to 70,000 -80000 VND/kg, everyone should keep the goods waiting for the price to increase further”.
Cause, on May 26, Son Ha Company (North) raised the price of pepper to 53,000 – 55,000 VND/kg but bought in insignificant quantity. Through May 27, the price of pepper jumped to 59,000 – 60,000 VND/kg, there are some traders and agents in Dong Nai, Binh Thuan, Dak Lak buying and storing at the price of 60,000 – 63,000 VND/kg.
On the morning of May 29, there were still people offering the price of 62,000 VND/kg, but only a moment when the pepper price dropped to 60,000 VND/kg, in the afternoon it was only 52,000 VND/kg.
On the morning of May 30, pepper prices fell on the market to 50,000 VND/kg.
In Dak Lak, the price of pepper is trading from 51,000 to 52,000 VND/kg but only traders, agents and people buy and sell together, the quantity sold is also very small because this price has not met the expectations of the people, the the company has not bought yet because this price is higher than the export price.
“The unstable price of pepper in the market not only makes it difficult for businesses to buy raw materials, but also creates opportunities for Brazil and Indonesia – two competitors to sell at Vietnamese prices, while Vietnamese pepper is sold at the same price. Nam only sells roundabouts in the raw material area, not to the exporter. Finally, the price of pepper in Brazil and Indonesia increased from 2,100 USD/ton to 2,500 USD/ton (FOB), but still lower than Vietnam’s pepper price, which is at 2,800 – 2,850 USD/ton (FOB). We do so to create conditions for Brazil and Indonesia to sell while Vietnam keeps holding on to goods,” said Hien.
Unsustainable increase in pepper prices
According to Mr. Nguyen Nam Hai, President of VPA, General Director of Coffee and Import-Export Inspection Joint Stock Company, the world supply and demand situation has not changed, so pepper prices in the world market have not increased. , but recently, domestic pepper prices have increased, especially in recent days.
In the past few days, domestic pepper prices have been affected by rumors creating a virtual price fever, not increased by demand from the export market. Thus, it can be seen that the world demand does not increase, but the increase in domestic pepper prices is not sustainable; and the current “price blowing” is not good for exports, making enterprises short of sources of goods unable to perform contracts with foreign partners.
Currently, in addition to signed contracts, businesses cannot sign new contracts because customers do not accept new prices.
The three largest export markets of Vietnamese pepper at present are China, the US and India. The US market bought enough goods until October, some businesses bought enough until December. In the Indian market, due to the impact of Covid-19 pepper processing factories in India have decreased by 50%. capacity, so demand in the Indian market is decreasing. With the current pepper price, Chinese traders are not buying, even selling pepper back to the domestic market, because the price of pepper is now higher than when they bought it, seeing a profit, they sell it without bringing it. about the country.
In 2014, 2015 when pepper prices in the world market peaked (220,000 – 250,000 VND/kg) as well as Vietnam, Brazil and Indonesia, increased pepper growing area while world demand for pepper increased. not much, so supply exceeds demand, pulling pepper prices down until now.
Now that Vietnam has finished the pepper harvest, the pepper output in 2020 will reach about 230,000 – 240,000 tons, down about 10% compared to last year, because some areas have low productivity when pepper prices are low, people switch to planting other crops of higher economic value. This is a negligible decrease and Vietnam is still the world’s leading pepper exporter.
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