Over 5 consecutive months, pepper prices were surprisingly quiet and also lost nearly 27% during this period. It is reported that the Futures Market Committee (FMC) has begun to oppose the establishment of a pepper corporation, and this has led to a strong liquidation.
Predictions of higher production, concerns about the quality and reduced demand of foreign markets have led to downward price predictions.
It can be seen that pepper prices this year fluctuate quite abnormally. On the NCDEX exchange, this year prices started at Rs 32,000 a quintal and slowly dropped to Rs 29,500 in mid-February but quickly recovered and jumped to an all-time high of Rs 45,700. However, after solid consolidation for several months, pepper prices are currently trading on the futures market at Rs 33,500 a quintal for February contracts.
The selling position doubled before the slow delivery supported prices for close contracts, while far contracts were forced to lower prices. The number of open contracts of the near term also showed the appropriate contraction.
Rumors and then
Rumor has it that the formation of a corporation was the driving force for the soaring price earlier. The high price expectations have attracted market participants to accumulate more positions. However, prices adjusted previous gains and liquidated sharply after the Futures Market Committee (FMC) launched an investigation against unusual price fluctuations.
Expectation of better crops in the domestic market as well as overseas markets has affected prices. The liquidation of goods on the market before the arrival of new products has put pressure on market sentiment. Pepper harvest season will start in mid-December in Kerala state and delivery will begin to increase in January.
Influence of special pepper
Indian pepper output last year has dropped to a low level for many years when only 43,000 tons compared to the average annual output of 50,000 – 55,000 tons. Indian pepper output in 2010/11 crop year reached 48,000 tons. Meanwhile, the current crop production is expected to increase to 55,000 – 60,000 tons. Pepper output in Vietnam this year decreased to about 100,000 tons from 110,000 tons in 2011.
The high price of Indian specialty pepper between domestic and international markets has limited exports. According to sources, exporters are selling their positions in the domestic market due to uneven prices. On the world market, Indian specialty pepper is currently valued at about 7,500 USD / ton while in August this type of pepper was priced at 8,400 – 8,500 USD / ton.
Meanwhile, Indian pepper is still priced higher than other countries in the world market and this has reduced demand for Indian pepper. The expected increase in global pepper production and the fluctuation of the Rupee have also affected the price.
According to reports of the International Pepper Community (IPC), in the first 10 months of 2012, India exported about 15,700 tons of pepper compared to 18,000 tons in the same period last year. It is estimated that in October India exported about 1,000 tons from 2,500 tons in the same period last year. But anyway until the end of this year, it is estimated that India will export nearly 17,500 tons. In the first 10 months of 2012, Vietnam's total export volume of pepper was 102,340 tons, down 12% from 115,780 tons in the same period last year. It is predicted that Vietnam's exports this year will reach about 110,000 tons.
While the significant downward trend on the exchange was foreseen due to very weak fundamentals, it is likely that demand for the winter and festive seasons may help limit the decline in the short term. The price is expected to be around Rs 30,000 – Rs 33,000, but the sell-off below this price could cause further weakness. A suitable trading price above Rs 36,000 will be a signal for a new rally.
Source Business Line / Giacaphe.vn
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