Pepper prices to stay weak on steady supply this year

Production of black pepper in Brazil and Indonesia is crucial in determining the price of the commodity in the next 3-4 months. Due to lack of interest from Europe and the US, the two major importers of pepper, both the countries (Brazil and Indonesia) have been forced to slash their prices.

Brazil has dropped the rates of BASTA variety to $3,400 from $3850 six weeks ago. Its B1 variety is quoting at $3350. Indonesia, where the prices were in the $4000-$4100 range a few weeks back, is now quoting around $3,500.

The experts believe the global pepper market may be steadied at comparatively lower levels for the rest of 2007 unless there is an orchestrated manipulations in contract trading.

Major importing nations are right now shying away from the market in expectation of steady supply and lower prices later during the year. According to latest estimates, Brazil's production will be around 35,000 tonnes and it has a carryover stock of 5,000 tonnes. In Indonesia, production will be around 20,000 tonnes with a carryover stock of 5,000 tonnes, while in Vietnam, the world's largest producer of black pepper, an inventory of around 35,000 tonnes will ensures regular supply till December.

The overall stock position of India will be around 40,000 tonnes. It shipped 15,700 tonnes of black pepper during the first half of the year, and is expected to export 5,000 tonnes in July and August. Though, the country is quoting the cheapest price ($3550) for September shipment, it has failed to attract importers' interest.

The traders are now pinning their hope on domestic winter demand. It is expected that domestic demand might rise to 12,000-15,000 tonnes during September-December. This may push prices up marginally in the domestic market.