Uncertainty clouds global pepper mart

Global demand for black pepper has weakened in the last couple of weeks as the US and the European buyers have adequate stock.

According to leading exporters, both the US and EU nations are "comfortably" covered till the year-end thanks to heavy buying in the June-August period. Currently, enquiries are active for shipments for January-March 2008, but no deal has taken place yet due to the prevailing uncertainty in the market.

Market watchers are confused on what course of action to undertake. There are diverse reports over stock positions in various countries, even as it emerges that the stocks are shrinking everywhere except in India.

There are reports that Vietnam, Indonesia and Brazil will not sell aggressively due to their low stocks.

It is estimated that Vietnam's stock has plummeted to 25,000 tonnes as a major chunk of the produce has already been shipped. Their current pricing strategy also upholds this as the price for 500 GL has edged up to $3100 a tonne, 550 GL to $3250 and ASTA to $3600 (all fob, HCMC). Since the next harvest will be reaped in January next year, there might be further appreciation in Vietnam's prices.

There are also reports that the actual production in Brazil is lower by 10,000 tonnes than the estimated figure of 38,000 tonnes this season. Brazil's current tag is $3400-3500 for B-ASTA (fob Belem).

Indonesia, too, will not be an aggressive seller because of their declining stock. This leaves India as the active seller with a rather comfortable stock, which will be the mainstay of importing nations till the year-end. The country's present tags for MG1 pepper is in the range of $3400-3450.

Between January and June 2007, total imports of pepper into the US, one of the largest importers of black pepper, was reported to be at 30,571 tonnes valued at $91.0 million. In terms of value there has been a significant increase of $39.0 million or 78 per cent when compared to the corresponding period last year. The high increase in value was mainly attributed to higher global prices since the second half of 2006.

In the April-June period this year, US imports of black pepper was 23,404 tonnes, down by 146 tonnes when compared to last year's import of 23,552 tonnes.

Brazil ranked as the largest supplier to the US market supplying 7,889 tonnes, followed by India 6,544 tonnes, Vietnam 4,350 tonnes and Indonesia 3,944 tonnes.