Brazil's pepper boom hits export prices

It is Brazil's turn in black pepper market now. As the production season has begun, prices have been slashed heavily and prominent importers like US and Europe are reported to be very active in Brazil.

The harvesting season in Brazil will go on till the end of December 2005 and total production is estimated to be at 35,000 - 40,000 tonne almost similar to the last season. Best quality B-1 grade is now offered at $ 1250 and ASTA grade is priced at $ 1275 which attracts US and European importers to Brazil.

But according to market sources, the farmers and exporters in Brazil are worried over the fact that the value realization in Brazilian Real is rather lower than that of last year as the currency had depreciated much.

Export traders here told Business Standard that the value realisation in 2004 was Rs 3,629 per tonne while in the current season this is only Rs 2,812 which shows a 33 percent drop in value realisation.

It is also reported that this had created a slow down in business and that rich farmers are holding back their product. But the B-1 grade is being offered at a very attractive price tag as its counterpart 550 Gmiter is being sold at $ 1260 in Vietnam.

Export traders said that B-1 grade of Brazil is superior in quality than 550 Gm/ liter variety of Vietnam.The next harvesting season in Vietnam will begin by February 2005 and till the end of December it is Brazil who is set to control the world market.

Reports from Vietnam said that export to Middle East is very active now and ASTA grade has a price tag of $ 1350 there. But Middle East nations mostly pick up 550 Gm/ liter grade at a price tag of $ 1260.

Vietnam had already exported 80,000 tonne pepper and the available stock is to the tune of 20,000 - 25,000 tonne.

According to experts this might force the exporters to fix higher prices till the end of January 2006 in Vietnam. Meanwhile, Indonesia has increased price of ASTA to $ 1375 -1400 while Indian quotations are still higher by $ 100 -125 than Indonesia.

Meanwhile import from Sri Lanka is rather sluggish now since imposition of import duty is expected at anytime. An export trader here said that most of the local players had withdrawn from importing pepper from Sri Lanka as duty bound import would be a costly affair.