Vietnam has shipped almost 23 per cent of their fresh crop, signalling some interesting developments in the global black pepper mart. The country, which is estimated to have a crop size of 110,000 tonnes this season, has already exported 25,000 tonnes according to the latest estimates available.
As the entire global pepper mart is now eyeing the supply from Vietnam, it is expected to swell up further due to increasing global demand. It is reported that buyers from Europe and the US have been active in Vietnam market on account of an anticipated short supply in the third and last quarters of the current year.
The market has ballooned up during the last couple of weeks and is expected to breach the level of $6,000 a tonne soon. According to experts, the price of Asta grade is likely to stabilise around $6,000.
As of now the nerve centre of the pepper market is Vietnam. India is no longer a player in the global scene. Supply from India is too short in the world market due to lower output in this season.
According to a leading Kochi-based exporter, India is not having much surplus to export, hence importing nations are not keen here. Also the current Indian price tag is slightly higher than that of Vietnam at $6,100 a tonne. Though Vietnam market moves in tune with the Indian futures counters, pepper is available there in the range of $5,600-5,800.
China is now in an aggressive buying mood due to crop failure there. Incessant rainfall in Vietnam had upset the processing and arrival of fresh harvests to warehouses which is also dampening the global supply. Interestingly suppliers across the globe, especially of Vietnam, are not to keen as main market parameters favour a sharp increase in the price of the commodity. Growers in Vietnam are not so aggressive in selling the crop due to high prices of other agri products like coffee and cashew.
China and Indonesia, both reported to have small crop this time and China is expected to have a big offtake from Vietnam this season. Around 23 per cent of the crop from Vietnam has already been exported and it is estimated that by August-September stock from Vietnam would be exhausted.
In certain areas of Vietnam, harvest is starting now and more arrival is possible this month. But, after April a major chunk of the fresh crop will be in the hands of exporters and traders. So, middle men and exporters expect a sharp increase in prices in the latter half of this year.
An estimated sharp fall in global production is also likely to pursue a sharp increase in prices this year. There may be a shortfall of around 33,000-35,000 tonnes as global production of the spice is pegged at 257,000 tonnes for this year. Last year, the total production was 290,700 tonnes. Sharp decline in production is projected in countries like India, Indonesia, China and Brazil while production will be static in Vietnam, Malaysia and Sri Lanka. The position of Indonesia will be more critical as this year production is likely to be only 10,000 tonnes due to adverse climatic condition.
In 2010, their production was 30,000 tonnes and had a carryover stock of 15,000 tonnes, aggregating a total supply of around 45,000 tonnes. But for the next crop season, scheduled for this July, the total output might be 10,000 tonnes and their carryover stock is negligible. Thanks to aggressive selling in the last season almost cent per cent of their stock was sold out. Similarly, in India production will drop to 40,000 tonnes from the normal size of 55,000 tonnes.
