Indian pepper exports lose zing

Withdrawal of subsidies by the government has hit exports badly.

The Indian juggernaut on the global pepper export front has come to a temporary halt because of many factors, especially pepper from Vietnam. Export order table of India is almost blank for February and March as the country is no more an attractive destination.

The stoppage of subsidies has hit exports very badly as it had led to a big leap in business in 2006. The government had stopped the scheme on February 2 as the target of 20,000 tonne had been achieved.

Thanks to this, India is no more a preferred destination on the price front as Vietnam has turned aggressive in the export market. As the plucking of pepper is in full swing, Vietnam has slashed their prices to $2400-2300 per tonne for 500 gm/l.

Vietnam traders have quoted ASTA at $2550, while India is currently quoting at $2800 per tonne. Experts said importing nations, including USA, are not showing much interest in Vietnam as they expect prices to come down further as season progresses. Some feel the price would go down to $2000.

Production in Vietnam will be more than 100,000 tonne and as season progresses further their quotations will be further down. Value added manufacturers from India are also placing orders in Vietnam thanks to advantage on the price front.

In February, India was the third largest importer from Vietnam with 548 tonne. Indonesia is offering $2800 per tonne, while Brazil's price levels are the same with Vietnam. But Brazil has a stock of 6000 tonne.

Meanwhile Indian markets are facing a serious threat from Sri Lanka also as the period of maximum import cap of 2500 tonne will end by March 31. From April onwards, Lankan pepper may pour into the Indian market. Sri Lanka is offering pepper at $ 2500 C&F to India and a large quantum of their total production will be exported to India.

Meanwhile harvesting in Karnataka has started now and domestic market would be centered more in Karnataka in the coming weeks as harvesting in Kerala comes to a fag end.

It is estimated that Karnataka will have a crop size of 18,000 -20,000 tonne, but some traders estimate the size at 15,000 tonne. But the course of the market will depend mostly on the movement of prices in futures market. According to leading traders, the huge stock position in exchanges would be harmful to the market as a few investors had piled up the stock.

The volatility in futures trading also affects the domestic market to adopt a clear route. If there is heavy sell off in the futures trading owing to changes in the global market, it might be disastrous for the Indian black pepper market.

According to experts, such a situation is likely to emerge soon as global parameters do not favour Indian market currently.