Pepper futures in NMCE remains firm on strong domestic demand and tight supply situation in the physical market. Fundamentals are still looking weak and Export demand is not improving and production is also likely to be higher. Output in Karnataka, the country's second largest producer, may rise by 10-20 percent due to conducive weather. Exporters are on a wait-and-watch mode and closely monitoring the price fluctuations in the Indian market. Tight supply position is experienced while the credit squeeze world over has slowed down activities while the requirements for the coming months of several consuming nations are yet to be sheltered. In India, the stocks held by the exchanges are estimated to be below 3,500 tonnes. Arrivals have dried up in the spot market and this is likely to continue till the end of November. Export demand is weak due to the ongoing credit crisis in U.S. and Europe. Indicating a slow down in demand for black pepper from the US, the country’s import of pepper has dropped by 30 per cent to 3,504 tonnes in August, compared with 5,062 tonnes in the same month last year. For the eight-month period beginning January 2008, total imports dropped to 31,819 tonnes, down by 6.5 per cent from 34,091 tonnes during the January-August period last year. India’s contribution to the US import basket dropped by 43 per cent to 685 tonnes during August, from 1,200 tonnes in the same month of previous year. Indonesia topped the table with 1,640 tonnes, followed by Vietnam with 850 tonnes. There is a tight supply situation in the International and in Indian market. Supplies have been dried up in the physical market and it is likely to remain tight till the arrival of new crop in December. However, the global demand, it might depend on how far the crisis in the US economy is going to impact the pepper market there. According to Vietnam Pepper Association, global pepper production this year would be 259,000 tonnes, much lower than the demand of 305,000 tonnes. Production in Vietnam in 2008 was lower than last year. According to the spices board India produced about 50,000 tonnes of pepper in 2007- 08, almost equal to the output a year ago. In Vietnam, harvesting ended in June while in India, harvesting starts in December and continues to February. The country shipped 12,750 tonnes of pepper during April-Sept, showing a fall of 33 percent. Indonesia, which has a short crop this year, is reported to have sold out the current crop.
December contract in NMCE traded in the range of Rs. 114.31– Rs. 116.65 and closed at 115.80 (115.90). Open interest increased by 5 to 252. Combined exchange volume stood at 346 metric tonnes. Pepper inventories in the NMCE accredited warehouses decreased by 10MT to 979 metric tonnes. Pepper spot price stood at 11,700 rupees per 100 kg. in Kochi.
Source : Commodityonline