Indian pepper exports in soup

High price and supply crunch are reasons

India is literally out of the global pepper mart as it currently offers the highest price along with Indonesia. General shortfall in supply lead to the sharp increase in prices. Both India and Indonesia now offer US $7,450/tonne for ASTA grade pepper. Business is brisk only in Brazil since that country offers the lowest tags across the global markets. India is only likely to export about 1,000 tonnes in September which is also because gains reaped from dollar appreciation. According to leading exporters, exports from India were weak in the current financial year on higher prices, poop supply conditions and quality related issues.

Global demand is also weak owing to slowdown in major European economies and in the US. Exporters told Business Standard that India could export hardly 6,000 tones in the April – September period of the current financial year. According to them, this is the right opportunity for India as Vietnam and Indonesia, two largest exporters in the world, are literally not exporting pepper because of short supply. But India is missing this opportunity due to higher prices and a supply crunch.  

 

Global pepper market, including black and white pepper is likely to remain tight for the rest of this year as leading producing countries are having very thin stocks. Vietnam is not even releasing indication prices as the country’s stock position is very bad.
On the other hand, Indonesia is only giving indication prices at $7,450/tone.

Vietnam, world’s largest producer of the spice, has already shipped 110,000 tones by the end of last month and the balance is in a range of 10,000 -15,000 tones only. For the first time in recent years, Vietnam traders are not even quoting prices in this  week. 

 

According to experts world demand is being met by Brazil as crop season is at its peak now. Both European and US buyers are active there since they offer the lowest tags across the world markets. Brazil offer B1 grade at $6,850/tone and $6,950 for B-ASTA. Importers from Europe and USA contract for low volumes because of the general economic slowdown  and they depend mainly  Brazil market. Major producers like Vietnam, Indonesia and India are not in picture as the prices are too high for the importers. 

 

Meanwhile, domestic production is likely to be lower in the next season that commences by December. Prolonged monsoon season has damaged the flowering of pepper wines in major producing centers of Kerala like Idukki and Wynad.  Growers of Idukki district told Business Standard that production will be lower this time by 40%. The situation is more or less the same in Wynad also. Benny Chacko, a Kattappana based grower said that there was continuous rainfall for around 90 days during monsoon which affected the flowering very badly. In most cases flowers were damaged, so only leaves were grown abundantly, he added. 

 

So in the next season Indian market has to depend mainly on crop from Karnataka. According to latest projections, market is likely to be hot during next year also as there will be an overall production shortfall  to the tune of 20%. If production drops in Karnataka situation will be more worse.  

 

During 2012, total production of pepper in Indonesia was around 75,000 tones  comprising of 55,000 of black and 20,000 tones  of white pepper. Along with the carry over stock a volume of 62,500 was exported in 2012. In 2013 production of black pepper is estimated to be significantly lower by around 25-30%, particularly in Lampung region. In the absence of catch crop during the current year, the limited carry over stock from 2012 crop has fully utilized for export during the first six month of the current year,  according to a report of the International Pepper Community [IPC].  Recent estimates indicate that this year’s output is hardly 30,000 tones.