Bearish phase ahead for pepper

The black pepper market is expected to shift to a bearish mode as overseas demand has slowed down, especially from the US. The Indian overseas quotations have moved on a rather steady note at $3,850/3,900 a tonne (fob Kochi) although deals were struck only for the next two months.

Exporters are not keen on taking long contracts owing to the high range of volatility and uncertainty in the futures market. The overseas demand has generally picked up from 10th to 17th of every month, when the near-month futures contracts reach the maturity date.

The overseas buyers were taking advantage of lower price tags in the futures market during the period, said city-based exporters.

Though there was a slowdown in the current external demand, the US and Europe requires more pepper, they said.

India still has the lowest price tag for the ASTA grade in the world. Vietnam, currently, offers 500 and 550 GL pepper at $3,425 and $3,575 fob, HCMC, respectively, though the quote price for the ASTA grade is not available. According to reports, pepper can be purchased from Vietnam even at the rate of $3,375 a tonne. Indonesia, which currently has the highest tag for pepper at $4,050- $4,200 fob, Panjang, and Brazil's new crop could be the crucial factors that may influence the future course of action in the global pepper mart.

Reports have put Brazil's total crop at 40,000 tonnes, with the initial pick expected to hit the market by the middle of August. The harvesting period was likely to be extended this time and may go on till mid-November, according to experts. Brazil has started offering the August-September crop at a price of $3,850 fob, Belem.

According to experts, there may not be a strong bull phase in the domestic pepper mart since there are 12,000 -13,000 tonnes of stock with the three commodity exchanges in the country. The global market is unlikely to face a supply crunch due to the lower output during the 2007 season. These factors have persuaded overseas traders to buy only when the prices were down on the futures market, experts said.