Indian pepper has of lately drawn world attention following the vulnerable price movements in the commodity. Black pepper prices have touched an historic height during the last month.
Pepper prices at the Kochi spot market touched a historic high of Rs 19,800 a quintal on July 30 before closing at Rs 19,200 on July 31. The same month saw the price quoted at Rs 15,300 a quintal on July 2, showing a substantial increase of Rs 3,900 per quintal within a short single-month period. The reasons given for the unprecedented upsurge in pepper prices are active buying support from the US and the Western and Eastern European countries as they have preferred India to cover their demand for black pepper before the anticipated hike in prices takes place.
The unclear monsoon situation in the country till date is also one of the causes for the upward price trend.
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Sources say that tight supply position in the other countries have also fuelled the price rise.
It also reflects an anxiety of major packers and grinders to hold a safe inventory in anticipation of a shortfall in output in Indonesia and Malaysia. The black pepper export shipments have registered a rise of 62.34 and 90.5 per cent at 33,557 metric tonnes from the Kochi port during a short span of only seven months i.e. January - July `97 against 20,670 and 17,618 metric tonnes respectively during the same corresponding period of `96-95.
Market sources say the black pepper prices now are facing resistance at the too high levels in the local as well as in the international market. Now the market is passing through a lean season.
The upward trend black pepper exports has remained unabated and touched 33,557 metric tonnes from the Kochi port during January - July `97 against 20,670 tonnes during the same corresponding period last year.
The continued increase in black pepper exports from India indicates a tight supply position in the counterpart countries.
It also reflects the anxiety of major packers and grinders to hold a safe inventory in anticipation of shortfall in the crop in Indonesia and Malaysia.
The International Commodity Exchange (ICE) is now in the final stage and is planning to start global futures exchange in black pepper on October 6 at Cochin only.
According to IPSTA, the commencement of futures trading in black pepper from Kochi is in co-ordination with the silver jubilee celebrations of the international pepper community scheduled in Cochin between October 6 and 11.
The regulatory framework has been devised to achieve the objectives of investor protection, full segregation of customer funds, net owned fund norms for clearing memebrs and prohibition of the off-exchange trading.
According to India Pepper and Spice trade Association, hopes of success of the international pepper futures contract are based on the fact that about 80 per cent of the underlying physical commodity is produced in the Asian region viz. Indonesia, Malaysia, Thailand, Vietnam and India. It is observed that where there is a major regional production of an internationally traded commodity, there will be a demand for derivatives to hedge against price volatility trebling in a decade
Average yearly price rise
(Rs/100 kg.)
Crop Year
1986-87 5,967
1987-88 5,262
1988-89 5,273+
1989-90 4,244
1990-91 3,985
1991-92 3,272
1992-93 4,473
1993-94 7,880
1994-95 8,463
1995-96 8,510
#1996-97 19,250
(#Aug.97)