Sharp drop in output leads to price rise in Pepper.

KOCHI: Black pepper in India is getting hotter every day with prices setting new peaks on a slump in supply. The spot prices reached Rs 625 a kg in Kochi on Thursday and it appears like bullish trend will prevail in the coming days.

A sharp drop in production has led to a surge in the prices in the last few weeks.

The total production is estimated to reach only 35,000 tonne compared with 50,000 tonne last year. The prices, which were ruling at around Rs 536 a kg at the end of March, have jumped almost 17% in two weeks.

According to industry sources, the carryover stock is fast depleting due to higher consumption arising from the extended winter in the US. The production is poor in Kerala while the output in Karnataka, the largest producer in India, is also said to be weak.

"Since the prices in Karnataka are hovering around Rs 635-650 a kg, several growers in Wayanad in Kerala are selling pepper in the neighbouring state. We are expecting the release of around 12,000 tonne pepper from Karnataka in the coming days," leading pepper exporter Kishor Shamji said.

The uncertainty over the fate of 6,800 tonne contaminated pepper in the NCDEX warehouses in Kerala is also worrying exporters.

The produce, which was contaminated by mineral oil, was seized by the Food Safety Standards Authority of India (FSSAI). With the traders moving to court against destroying the contaminated lot, which comes to around 6,000 tonne, the NCDEX and FSSAI are exploring ways to clean it and re-use. Meanwhile, high prices in the

local market have dashed the hopes of exports. Indian black pepper is priced at around $10,500 a tonne, the highest rate, in the international market. This is around $3,000 higher than the prices of Vietnam, the largest producer of black pepper. "Vietnam has already exported 54,000 tonne till the end of March. Another 20,000 tonne is expected to be shipped in April," said Kishor Shamji.

With the domestic production ruling low, imports are likely to see a surge despite a 70% duty. The exporters are opting for imports on condition of re-export after value addition.

As per the latest statistics available from the Spices Board, the black pepper exports have shown an increase of 41% in quantity and 23% in value at 15,350 tonne and Rs 651 crore respectively, for nine months ended December 2013. The exports have declined in the past two months.

Source : economictimes.indiatimes.com