Rising domestic demand, drop in exports give pepper a weak bias.

Rising domestic dem-and, coupled with a drop in exports, continues to set the trend for the pepper market. The main suppliers of the commodity to the global market are Vietnam, India, Indonesia and Brazil; while the major destinations of its export are the US, Europe, Japan and Australia.

Unfortunately, India has been fast losing out to Vietnam in black pepper exports. According to the Vietnam Pepper Association (VPA), the country has been exporting seven to eight times more than India over the last couple of years.

The main reason for this sharp decline in exports is the high prices being demanded by India over the past two to three years. The country is losing its traditional markets like the US and Europe, thanks to the high price tag. According to commodity market analysts, rising domestic consumption is the biggest reason for the high prices demanded by India.

This is the harvesting season for pepper in Vietnam. A spokesperson of Emkay Commodity Research, an arm of Emkay Commotrade, says: “Vietnam, the world’s largest producer and exporter of pepper, which is now in harvesting season, is expected to produce more.

Exports demand for Indian pepper in the international markets is weak due to price parity. So, pepper is likely to be rangebound, with weak bias in the near term.”

India’s April-January export data from the Spices Board of India put the figure at 11,550 tonne for April-January 2012-13, lower by 48 per cent against the same period the previous year.

In the near term, rising new crop arrivals and Vietnam’s good harvest is likely to weigh on the prices of pepper, Emkay Commodity Research said.

According to International Pepper Community (IPC), an intergovernmental body of pepper producing countries, India's pepper production is estimated at 55,000 tonne in 2013 against last year's 43,000 tonne. Exports are estimated at 25,000 tonne in 2013 against 17,500 tonne in 2012. The global pepper production is estimated at 3.2 lakh tonne for 2013, down against the figure of 3.3 lakh tonne in 2012.

According to Commodity Online’s pepper outlook, “Pepper is likely to extend negative trend on rising new crop supply from major pepper producing areas.” The projection further says that the crop in Karnataka and Tamil Nadu will be better this year. However, quality issues in warehouse stocks are also putting pressure on market sentiment.

“In the short term, there are no clear directions for pepper,” it says.


Source : mydigitalfc.com