The global black pepper market is currently in an appreciating mode due to low stocks in all major producing countries. For the current month delivery, Vietnam, the world’s largest producer, has quoted $2,300 a tonne (FoB HCMC), but for July – September supply the tag is higher by $100.
Bad weather conditions in Vietnam and strong resistance from farmers to sell the stock at ‘lower’ prices is also brewing up a strong bull phase in the global market of the spice. Even the price of 500 GL variety has risen above the $2000-mark and has been quoted at $2,020. The latest tariff for 550 GL grade is $2,170.
It is known that for the next six months, the stock position across the globe would be too low, which can raise prices. According to official sources in Vietnam, till May this year, the country had shipped 52,000 tonnes, up 43.3 per cent from January–May last year. So it is estimated that the country will not have more than 50,000 tonnes.
Vietnam proposed to export 48,000-50,000 tonnes during the second half of the current year taking the total annual tally to 100,000 tonnes.
Except in Brazil, the next crop season will be active only by the end of this December. For Vietnam, the season will ripe only by next February. Harvesting in Brazil will commence from August, but across the globe demand will improve by September due to the change in the climate.
India is also having low stock, but the country is not at all a destination for overseas buyers. MG1 is being quoted at $2,800 a tonne which is nowhere near the global average price. Indonesia is currently quoting $2,375 -2,400 a tonne (FoB – Panjang) and Brazil offers $2,350 a tonne (FOB - Belem). But the local demand coupled with heavy speculation in futures counters ensures a much higher price tag in India.
Meanwhile, economic recession has not affected the import by the US. During January-March 2009, the US had imported 10,677 tonnes against 11,888 tonnes in the same period last year.
The lower stock level coupled with sharp seasonal increase in demand will help the global pepper mart to reap a better level of price advantage for the next six months.
Source : Business Standard