Marketfed reaps windfall in black pepper auction

Mops up Rs 10,800 a quintal against a benchmark price of Rs 10,100.

The Kerala State Cooperative Marketing Federation's (Marketfed) auction of black pepper on Tuesday fetched it a much higher price than expected, even as experts attributed the higher returns to a bullish futures market.

Although Marketfed had fixed a benchmark price of Rs 10,100 a quintal, it received the highest price tag of Rs 10,800.

Ajithkumar Varma, managing director, Marketfed, informed that 320 tonne were sold at the highest price tag, with seven companies responding to the auction.

Marketfed had invited quotations for selling 400 tonne. But, it could sell only 320 tonne, as the maximum price was quoted for that quantity, he added.

Investors, and not genuine exporters, have fuelled the recent auction, as the pepper futures market is currently quite attractive.

The prices of October contracts are above Rs 12,200 a quintal and hence the better response for the auction, noted an exporter. Exporters have not shown interest in the recent auction, owing to a subdued exports market, he added.

Meanwhile, Marketfed is planning to offload the remaining stock of 2,130 tonne immediately, as the domestic market is favourable.

Sources said that the next round of auction may take place before or after the Onam holidays. If the current bull phase continues, the next round of auction would be very soon, they added.

G Sugunan, director of Marketfed, said the board of directors had already decided to offload the stock immediately to benefit from the favourable market trends.

He added that better prices at the forthcoming auctions would wipe out the entire losses accumulated in the past.

The board has directed the immediate sale of pepper. But, there would not be an outright sale of the whole stock, as it may affect the market badly. The sale would be in a phased manner, he informed.

The federation had procured 4,755 tonne of black pepper at a price tag of Rs 7,500 a quintal as part of a market intervention operation a couple of years ago. It could sell 2,305 tonne in the earlier rounds of auction.