Pepper May Drop on Weak Export Demand.

Pepper rates found some support at the lower levels as absence of export demand prevented a major upside movement. Traders however expect the demand to pick up in coming weeks that could support the prices. Traders are reportedly waiting for some more corrections before initiating fresh demand in the mandis. Overall trend had remained moderately up as rains in growing areas have reportedly affected the productivity adversely and this could support the prices from a medium term point of view. IPC has predicted 2011 crop to be lower by 2% at 309 952 MT. Carryforward stocks are expected to decline marginally to 94582 MT vs 95442 MT. Global exports have declined by 11% to 237650 MT.

Indian production expected to decline to 48000 MT. Reports of lower stocks could further support the price and traders are anticipating both exports and domestic demand to rise in coming weeks. Strengthening of Dollar vs Re could have positive impact on the export front. Vietnam is having low stocks as per reports that could result in export demand shifting to India. Brazil and Indonesian crop expected to be lower. Low carryover stock in Brazil and Indonesia is likely to raise exports here in coming months. Reports of farmers shifting to other more profitable crops have affected the production aspects for the crop in India Latest reports from Spice Board of India indicates the likely Pepper exports for the period April Nov have fallen by 17% to 11500 MT in 2010 from 13850 MT in 2009 same period.

Source : indiainfoline.com