The global market for pepper is facing the biggest challenge after the crisis in 2006 as prices are plummeting on a day-to-day basis from all origins.
Local prices quoted Rs 10,200 per quintal, one of the heaviest crash since June, 2006. In June, 2006, price of ASTA grade pepper had plummeted to Rs 6,500-7,000 per quintal and as a bailout package, the government introduced an export incentive scheme at the rate Rs 7 per kg.
Three years ago it was the glut in the global pepper mart that caused the crisis, while this time it is the dearth in demand world over, especially from the EU and the USA, who have backed out of the market as recession has adversely hit their retail and industrial segments.
Leading importers of the EU nations said that there was 40 per cent drop in retail demand and it would not be a viable option to enhance the inventory. It is said that Europe is having comfortable inventory and stockists are not in hurry to buy more pepper in the current economic scenario.
Most of the European and American importers are having stocks piled up at higher prices in 2008 and they want to get rid of the stock fully. According to leading Kochi based exporters, the US buyers were not showing interest in buying pepper even at very low quotes in all the producing nations.
Vietnam has slashed their tags to below $2,000 level, but low overseas off take is causing trouble in the midst of harvesting season there.
The country quoted $1,650 for 500 GL, $1,750 for 550 GL and $1,950 for ASTA per tonne (All FOB - HCMC). But even at these low quotes demand is so weak there, indicating a further downward movement in prices. European buyers indicated that there might be a support level at $1,500 for 500 GL.