Pepper futures buoyant; prices hit Rs 7000 mark

With the black pepper market showing a slightly bullish trend, futures trading has also become buoyant helping the prices rule above the Rs 7,000 a quintal level.

It is also noteworthy that Ncdex has grabbed the first position in futures trading of black pepper, pushing back NMCE, which had an upper hand till recently, to the second spot.

An export trader here told Business Standard that there is a considerable shift in futures trading from NMCE to Ncdex. He also said that this switch-over of business, had helped the market go up as Ncdex has wider coverage in trading, especially in north India.

The price difference in both the exchanges is the major advantage for investors as the average quotations are higher by Rs 3 per kg at Ncdex than NMCE. This has made a considerable increase in the positions and volume of business in Ncdex recently.

A top official of a broking firm here said that NMCE had concentrated mainly on Kerala-based cash crops and a major share of their business is from that state.

Some of the Kerala-based broking houses also promoted NMCE initially, but now Ncdex has made a commendable improvement in pepper trading. One major attraction to traders at the Ncdex is, to totally shift to de-materialised format of business, which NMCE had not introduced so far.

He also said that the professional approach with which Ncdex has provided DP facility, has attracted more investors especially from north India.

Ncdex has surpassed the volume of business of NMCE, which till recently had a lions share of business in pepper trading. Participation of more north Indian traders is the major factor for this paradigm shift in pepper futures trading, which in turn, has helped prices reach high.

Ncdex is now in search of more warehouses in Kerala as the volume of trade is on the rise. They have already taken 6 godowns in Kerala, 2 of the State Warehousing Corporation and 5 in the private sector and now, are searching aggressively for more godowns to stock black pepper. They are planning to increase the number to 9 immediately.

Meanwhile, the pepper market is rather ambitious now, as global prices are at the rock bottom level for the time being. Vietnam is not so aggressive in the market and are not even quoting price for the ASTA grade.

Although they have quoted price for 500 gm/litre at $1260 a tonne and 550 gm/litre at $1350, traders said that there had been no business for the last few weeks. The last traded prices varied from $1220-1300 and Brazil has quoted ASTA at $1350.

Indian parity is higher by $300 a tonne and futures market is the main factor for the higher quotations. This has happened in anticipation of a production loss in India by 20-25 per cent during the next season. It has been estimated that the total production will be 50,000-55,000 tonne in comparison to last season's production of 70,000-75,000 tonne.

The global market will slow down for the next 2-3 weeks, as Christmas holidays will commence in Brazil by the beginning of the next week and the European and the US markets will be closed by the end of the next week.

An export trader said that the global market would be active only by the second week of January 2005. But the market has a good prospect for black pepper for the next couple of months.