Black pepper prices up on overseas buying spree

Even as experts suggest that India's MG1 grade black pepper is a 'good buy', recent increase in overseas demand, coupled with a buying spree from upcountry vendors, has pushed the futures prices of pepper high by 3 per cent on an average in the last two trading sessions.

Traders expect a rather stronger market for the time being, as Europe, the USA, Canada and Australia have placed fresh orders for MG1.

According to a leading Kochi-based exporter, these countries have already bought around 500 tonne for the January shipment and more orders are on the anvil.

The major attraction for the importing nations is the tag, as, currently, domestic prices are lower by $175-200 a tonne than those of its arch rival Vietnam.

Vietnam currently offers ASTA at $2675 since the country is running out of stock, while the current Indian tag is $2500-2525. Brazil had sold out the major chunk of its produce and, according to European experts, it will have very limited stock till next September.

Other major producers such as Indonesia and Malaysia are almost out of the picture making way for a solo Indian show in the global pepper market for a short while.

An estimated drop of around 15 per cent in global production and the anticipated delay in harvesting in India have also forced importing nations, including Japan, to feel that India is the right destination for the time being.

It is also reported that the Union government might stop the export subsidy scheme as the target of 20,000 tonne will be achieved by February 2007.

The freight subsidy at the rate Rs 5 a kg had provided a level playing field for Indian black pepper in the global market and it had improved India's performance in the current financial year. Till October, total export was pegged at 13,825 tonne, while during the same period in 2005-06, India exported 8971 tonne.

Experts also feel that there would be urgency in availing of export subsidy advantage in the next couple of months. Meanwhile, the upcountry demand is also picking up, thanks to winter season and exhausting stock with traders.

Local traders said the ceiling of commercial establishments in New Delhi had slowed down the stocking operations for the winter, but it had picked up now. This has also caused a surge in the demand for black pepper.

Meanwhile, according to information from pepper-growing areas of Kerala, the next season would be slightly delayed due to prolonged rainfall.

Harvesting will gain momentum only by the middle of January, although pepper from the southern part of Kerala will hit the market by the first week of January, contrary to the usual cropping pattern that starts by the beginning of December.