Black Pepper Futures May Move With Positive Trend.

India pepper futures plunged in the last two consecutive sessions on profit taking amidCorrection from the overbought levels. Benchmark December pepper contract on NCDEX plunged well below the important supports of Rs. 21850, Rs. 21500 during the Saturday's sessions and ended above the 50-day EMA. Prices rebounded from the low of Rs. 21315 and ended at Rs. 21746, short-term correction is over. Presently prices are hovering below the 9-day and 20-day EMA. The 14-day RSI ended the sessions at 44.82, indicating the contract is in the neutral zone.

The December futures closed the Saturday's sessions lower at Rs. 21746, down 0.8 percent over the last close and the open interest is down 4.53 percent and volume traded surged to 6,774 tonnes from 6,737 tonnes.

There are reports of heavy rain in Kerala's major pepper growing areas of Idukki and Wayand districts. The heavy rains in the state are likely to have impact on crops and this is likely to support the spice in short term. This is likely to delay the harvesting of the crop also. Normally, in India, pepper harvest will begin in plain areas in kerala by mid December and in hilly area, it will begin by January. There is heavy rainfall reported in the plain areas also, other pepper growing areas in kerala. According to a leading trader and farmer from Kerala, the prolonged heavy rains are likely to affect the production of major cash crops and hit the plantation economy of south India hard.

The arrivals in the Kochi remained lower while spot demand was good. Strong export demand and domestics demand are expected to emerge ahead of Christmas and New Year while arrivals from the fresh crop would begin in next January only. The current stock levels are not enough to meet demand. The stock levels with other countries like Vietnam, Brazil and Indonesia are at lower levels.

Fundamentals supported the commodity to gain and are likely to push the commodity further upside in long term. According to the 38th IPC meeting held recently in Kochi has projected the new crop of 2011 to be lower by 2% at 309,952 tonne against 316,380 tonne in 2010 and 318,662 tonne in 2009. Carry-forward stocks in producing countries are projected to decline marginally to 94,582 tonne in 2011 from 95,442 tonne in 2010. India exported total quantity of 10,500 tonnes of pepper valued Rs. 187.50 crores during April-October 2010 as against 12,250 tonnes valued Rs. 191.16 crores of last year. The unit value of pepper has increased from Rs. 156.05 per kg in 2009-10 to Rs. 178.57 per kg during 2010-11.

NCDEX pepper for the December delivery likely to trade in the range of Rs. 21510-22250 in today's trading sessions. The contract has next resistance at Rs. 21830 and at Rs. 22250. Meanwhile, the contract has support at Rs. 21525 and at Rs. 21350 per 100 kg.

Source : indiainfoline.com