The Indian pepper market is only weeks away from a serious supply crisis, once October delivery is cleared on the futures exchanges.
The total stock available with the comexes is pegged at around 4,200 tonnes, of which 2,000 tonnes is committed to be shipped this month and November. It is likely that the Indian exporters default on their overseas commitments, like it is reported from Brazil, or there might be a serious slow-down on the export-front during November and December.
The next harvesting season will be active only by the middle of December and according to pre-harvest estimates from various parts of Kerala and Tamil Nadu, the output might drop by around 30 per cent. Production is estimated to go up in Karnataka, but over all, short supply can be expected the next year, too.
Brazil is currently on an oversold position and is quoting prices for January delivery at $ 2,900 a tonne (FOB-Belem). There are also rumours that Brazil might default on its commitments, because of quoting very low tags for October-December commitments.
A major chunk of Vietnam stockists and exporters are holding pepper due to confusion in currency valuation and other economic concerns. The country is reported to be having a stock of around 30,000 tonnes. Vietnam offers $2,900 a tonne for 500 GL grade, $3,100 for 550 GL, and $3,350 for V-ASTA (All FOB – HCMC). Indonesia is not offering prices and India quotes $3,200-3,250 for MG1 pepper.