Domestic pepper set to spice up global marts

Price rise in Vietnam cited as reason

India's share in black pepper export is likely to increase globally following the sudden price rise of pepper in Vietnam. Reflecting a changing trend in global markets, countries like the US are increasingly relying on exports from India. Traders said the US had already placed orders for June, July and August shipments.

Vietnam has increased pepper prices by $100 per tonne on an average narrowing the gap between Indian and Vietnam prices considerably. Vietnam quoted $1220 for a tonne of 500 gm/liter grade, up by $90-100 compared with the prices on May 15. The price of 550 gm/liter has been increased to $315, up by $85 and ASTA grade has been quoted today at $1410, up by $100. Two days back, Vietnam had quoted $1450 for ASTA grade which forced importers to turn to Indian market.

Supply shortage has caused the sudden spurt in prices, as Vietnam was very aggressive on the export front during the last four months. The country had exported around 60,000 tonne during 1st January to 20 May of 2006. The total production in the current season would be 90,000 tonne compared to last season's 105,000 tonne. According to market sources, presently, Vietnam would have an export surplus of 30,000 - 35,000 tonne. Major pepper-producing nations like Brazil and Indonesia are lagging behind in exports owing to various reasons. The value of Brazilian real has declined to a 13-year low against the US $. Vietnam has enjoyed a monopoly in the global export market for black pepper and hence the sudden spurt in prices.

Though Vietnam raised the pepper prices, ASTA grade from India is costlier by $150 per tonne. However, import to India would not be a viable option as one has to take into account freight charges of $125 -150 per tonne.If the current price level continues for next few weeks, exports from India are set to rise.

Meanwhile, pepper importers such as Germany, expect the price of black and white pepper to increase by the end of 2006 and better price realisation in 2007. A market analyst from Germany said global production would decrease next season as growers in various countries, including Vietnam and Brazil are shifting to other crops owing to lower price realisation during last three years. He added that price of black pepper might increase by $300 -400 per tonne within next 10 -12 months.