Purchasing power from China is weak, pepper prices have decreased

Pepper price cooling down due to the lack of Chinese purchasing power

After increasing by more than 30% in the three months from December 2023 to February this year, black pepper prices in the domestic market have leveled off and are showing signs of cooling down.

As of the trading session on April 10, black pepper prices in the Central Highlands and Southeast regions fluctuated between 90,000 – 91,000 VND/kg, down 2,000 – 6,000 VND/kg (corresponding to 2 – 6%) compared to late last month.

Pepper prices decreased in the context of additional supply from the 2023-2024 harvest. Meanwhile, export Pepper had a significant decrease compared to the same period last year due to the lack of Chinese buying demand.

Preliminary statistics from the Vietnam Pepper and Spice Association (VPSA) show that Vietnam’s pepper exports in March reached 25,579 tons, down 28.8% in volume over the same period last year. 2023.

Accumulated to the end of the first quarter, Vietnam exported 56,712 tons of pepper of all kinds, with a turnover of 235.6 million USD, down 26.1% in volume (equivalent to 20,015 tons) and down 0.1% in value. turnover compared to the same period last year.

In particular, exports to China – Vietnam’s largest pepper consumption market last year decreased by 95.8%, reaching only 1,083 tons compared to 25,919 tons in the same period. This number is even lower than the 2,138 tons achieved in the first quarter of 2022, when China was closed due to the COVID-19 pandemic.

This result makes China fall to 14th place in Vietnam’s pepper export market in the first quarter, accounting for 1.9% market share compared to 33.8% in the same period.

This is contrary to many previous forecasts that China’s demand will increase after the Lunar New Year and push pepper prices higher.

In addition to China, pepper exports to the African market also decreased by 23.1%, of which Egypt decreased by 9.7% to 1,389 tons and Senegal decreased by 38.0% to 588 tons.

However, the positive point is demand import of some other key markets are rebounding after a decline last year.

For example, the US market, Vietnam’s number one pepper export market in the first quarter of the year reached 15,185 tons, an increase of 27.9% over the same period and accounting for 26.8% of the market share.

In addition, exports to India reached 3,793 tons, an increase of 19.6%; Korea reached 2,164 tons, a sharp increase of 179.9%.

Exports to Europe also increased sharply by 24.7% over the same period in 2023 and accounted for 26.3% of the market share, of which the largest export to Germany increased by 113.8% to 3,701 tons; The Netherlands increased by 76.9% to 2,598 tons; exports also increased in Russia (25.1%); France (8%); Spain (32.3%), Italy (203.6%)…

The average export price of black pepper in the first quarter reached 3,966 USD/ton, white pepper reached 5,552 USD/ton, an increase of 562 USD/ton and 593 USD/ton respectively compared to the same period in 2023.

Will pepper prices still stay high in the near future?

Although there is a downward adjustment, pepper prices are expected to remain at a high level in the near future.

In a recent report, the Import-Export Department (Ministry of Industry and Trade) forecasts that pepper prices in producing countries will continue to remain high due to increased demand, while supply from producing countries Indonesia, Brazil, Malaysia and Cambodia are not enough to compensate for the decrease in exports from Vietnam.

Currently, consumers around the world are willing to pay high prices for high quality pepper. In particular, the US, EU, Middle East markets… increase the need to import products that meet sustainability in social, environmental and economic aspects throughout the supply chain.

Meanwhile, in countries with large pepper production, Brazil has passed the harvest season, Vietnam has entered the season, while the main harvest of Indonesia and Malaysia is in July every year.

Information from the Vietnam Pepper and Spice Association (VPSA), speculation is the main reason leading to the “hot” increase in pepper prices. Vietnam’s harvest is in its main season, so the phenomenon of hoarding goods pushing up prices will not likely happen in the near future.

However, pepper prices are forecast to remain high. This year, the harvest was early due to the hot weather coming early due to El Nino. Harvest is expected to end at the end of March. The actual output is lower than VPSA’s expectation, estimated at only 140-150 thousand tons.

According to VPSA, Vietnam provides about 50% of global pepper output, but due to a sharp decline in area, Vietnam’s pepper output in 2024 may be at its lowest level in many years.

According to Nedspice Group, the scale and timing of new export demand in Vietnam will determine the price trend in the coming months, especially China plays an important role.

Nedspice Group forecasts global pepper production to reach about 465,000 tons in 2024, down 6,000 tons compared to the previous year. In addition, global pepper consumption is expected to be at 529,000 tons, 64,000 tons higher than production. This caused inventory to drop to its lowest level in the past 6 years.

Vietnam’s harvest this year according to Nedspice is about 157,000 tons, down 15% compared to the previous year. In recent years, there has been very little new pepper planting in Vietnam and many old trees. At the same time, the area of ​​pepper trees is also shrinking and being replaced by crops that bring better income such as durian.

Nedspice believes that rising pepper prices will encourage farmers to increase production, boosting pepper productivity in the coming years. However, new planting will take time to harvest, so output is unlikely to recover soon.

Enterprise FDI ranked first in Vietnam’s pepper exports

According to VPSA data, VPSA enterprises accounted for nearly 90% of Vietnam’s total pepper exports in the first quarter with a volume of 50,918 tons, an increase of 16.8% over the same period. In contrast, businesses outside VPSA only exported 5,794 tons, a sharp decrease of 82.5% and accounting for 10.2%.

Two foreign-invested enterprises, Olam Vietnam and Nedspice Vietnam, ranked first and second respectively in the ranking of Vietnam’s largest pepper exporters.

In the first quarter, Olam Vietnam’s pepper exports increased sharply by 50.4% to 5,792 tons. Similarly, Nedspice Vietnam also increased by 24.5%, reaching 5,245 tons.

Vietnamese enterprises ranked in the next positions include Tran Chau and Phuc Sinh, with volumes decreasing by 27.5% and 4.7% respectively…

Some businesses said that in addition to the burden of increased raw material costs, pepper export businesses are also greatly affected by high transportation costs due to escalating tensions in the Red Sea region, especially on the route to the EU. – where 20% of Vietnam’s pepper is consumed.