Global pepper mart to get hotter on less stock

An estimated fall in the black pepper stock, coupled with likely panic buying of white pepper by European dealers, is set to further strengthen the global pepper market, which is already in a bull run, according to domestic as well as international dealers.

The present domestic market price level of Rs 8,700 a quintal (garbled) may touch the psychologically important Rs 10,000 mark as there will be a shortfall in the black pepper stock by around 20,000 tonne during the current financial year. Garbled grade was sold at Rs 6,950 a quintal on June 24.

In both Vietnam and India, the harvesting season will begin by January 2007 and for the rest of the year, there will be pressure on supplies.

The shift in the global pepper market is mainly due to a sudden spurt in price levels and the rising demand for white pepper. And the shift in the demand and supply pattern of pepper has caused a sudden, unprecedented change in the global pepper market that had been moving rather quietly for the previous two-three years.

According to a Singapore-based trader, the white pepper prices in Muntok (Indonesia), where maximum quantity of the variety is produced, have shot up to $3,300 a tonne (C&F New York) on the back of a heavy shortfall in production.

The trader said, in just 30 days, the prices had increased by $750 a tonne. He said the sharp rise in the mining of tin had badly hit pepper output in Muntok island, putting the total production for the current year at only 8,000 tonne "� half the usual quantity of 15,000-20,000 tonne.

Some leading city-based traders said Europe was buying white pepper aggressively as the prices were by the day and this had badly affected the supply of black pepper too.

Vietnam produces white pepper out of black pepper and, according to estimates of some European importers, the country has already exported 8,000 tonne and is going to export another 5,000 tonne.

According to estimates of various global agencies, 1,00,000 tonne was exported the world over during January-June 2006 and the rest of the year around 1,20,000 tonne would be required.

But total availability will be lower at around 1,00,000 tonne (Brazil: 35,000, Vietnam: 25,000, Indonesia: 15,000, India: 10,000, Malaysia: 6,000, Ecuador: 3,000 and Sri Lanka: 2000), causing a shortfall of 20,000 tonne.

According to Singapore-based traders, prices of white pepper might touch the $4,000 level in a short period and this would open up a new chapter in global pepper trading. He said if US operators stepped in the trade, the global market could witness a sea change.

Meanwhile, Vietnam has raised prices of black ASTA to $1,850 a tonne and Sarawak (Malaysia) has increased the tag to $2,500 (all C&F New York), while Lampong (Indonesia) is quoting at $1,900.

Current Indian quotation for ASTA is $2,050 (C&F New York), up by $100 from last week's closing, but US importers are not interested at these levels, as they are waiting to see the Indonesian season in full swing in a couple of weeks.