According to pepper export enterprises, pepper prices are highly volatile, import customers are the ones who benefit the most while export enterprises suffer great losses…
The average pepper price on August 28, 2024 in the domestic market fluctuated around 143,000-144,000 VND/kg, recovering from the two-month low set in mid-August of 137,000 VND/kg.
Rising pepper prices will have two-sided effects, one group will benefit and the other group will suffer. Mr. Ho Tri Nhuan – Director of Gohan Company said that the people who benefit the most are import customers while export businesses suffer great losses.
According to Mr. Nhuan, in May and June, the amount of exported goods increased dramatically. This is also the time when pepper prices peaked at 170,000 – 180,000 VND/kg. However, the export price is only about 100,000 VND/kg. Businesses are forced to buy at high prices and sell at low prices. Meanwhile, importers sell for 140,000 VND/kg in the host country.
The cause of this situation comes not only from the decline in supply (affected by the weather and people’s tendency to change crops), but also from speculators.
Mr. Nhuan said, many people “held” pepper from the beginning of the year and took profits, but then they bought it at the peak price. In the overall market, there are more losers than winners. Those with profits are only about 5,000 VND/kg but those with losses are up to 30,000 – 40,000 VND/kg.
Mr. Nhuan said that the market fluctuates too much, not simply because of supply and demand but also because of speculation. Big, top businesses also suffered quite severely.
Sharing the same opinion, Mr. Le Duc Huy – General Director of Simexco Dak Lak also said that the pressure on businesses today is very great.
Mr. Huy emphasized that the average export price of the enterprise is lower than the purchasing price from the domestic market. However, farmers always think that businesses make big profits. In fact, with the current highly volatile market context, every business must first try to maintain its existence.
Commenting on the market from now until the end of the year, Mr. Hoang Phuoc Binh – Permanent Vice Chairman of Chu Se Pepper Association (Gia Lai province) said that it is forecast that the price increase cycle will continue to last. Because if the pepper crop comes, even if it is a little better than the last crop, it will not be able to make up for the pepper area that has been lost recently and is still continuing to be lost.
According to Mr. Binh, we are at the end of the inventory from previous years. Businesses shared that when they buy 10 tons of pepper, about 3-4 tons of pepper are old goods that have been stored for 2-3 years.
Thus, if stock runs out, there will be a serious shortage of pepper. That also means that the lack of supply here is almost certain.
Standing Vice Chairman of the Pepper Association Chu Se predicts that the next cycle of pepper price increases will last longer. It is forecasted that pepper prices will not only increase to 300,000 – 400,000 VND/kg but may even increase.
Meanwhile, the Vietnam Pepper and Spice Association said that the purchasing power of the Chinese market shows no signs of improvement until the end of this year. However, world demand for pepper is increasing and the EU region is still a large consumer market for Vietnamese pepper. Besides, the pepper processing capacity of Vietnamese enterprises is very large, can reach 140,000 tons/year, which is an opportunity to help Vietnam’s pepper industry develop in the near future.
Regarding pepper prices this week, experts expect the upward momentum to continue. With only a few days left until the National Day holiday, the cumulative buying force is expected to help pepper prices recover to the level at the beginning of August 2024.
