The Hindu Business Line : Pepper prices witness divergent trend

Kochi, Nov 8 It appears that the bearish reports spread in the markets from mid-week last that all the origins are holding huge stock of black pepper have turned out to be a farce, as prices at all the origins till the weekend remained unchanged and rather firm except for MG 1which became easier.

It was a calculated move to pull down the market in India aimed at covering at lower levels by some operators in the market, observers told Business Line.

Bearish sentiments built by these reports resulted in selling pressure in the primary markets.

The domestic demand suddenly waned as the dealers refrained from buying in a declining market.

Delayed monsoon

The north-east monsoon has arrived, albeit delayed, in the growing areas and it might delay the harvesting of the next crop. The dealers and growers who are holding stocks might stop liquidation so as to arrest any further fall in the prices, they said.

According to the trading sources if the availability in all other origins was so large then how has not it been reflected on the prices of these origins.

It gives the impression that the propaganda unleashed by some operators during the past few days might be a “sheer bear speculation”.

Dealers and farmers in the primary markets started liquidating late last week taking cue from the confusing reports that large quantities of pepper are available in Indonesia, Brazil and Vietnam and the prices would fall further.

“They were trying to create a bearish sentiment in the market and that appeared to have worked as there was a selling pressure”, market sources told Business Line.

Fundamentals steady

At the same time, the fundamentals remained unchanged and the prices at all the origins were reportedly steady to firm, they claimed. The prices dropped at a time when there were good buying activities from the domestic market. It gave the indication that the internal demand was picking up for the winter requirements.

But, the sudden fall later in the futures market and consequently on the spot drove the domestic buyers away. Overseas buyers are now closely watching the volatility in the futures market which has made it unpredictable, the sources said.

Decline in contracts

November, December and January contracts showed a decline of Rs 95, Rs 78 and Rs 45 respectively during the week and closed at Rs 14,915, Rs 15,129 and Rs 15,292 a quintal.

Total turnover fell by 8,908 tonnes to close at 39,191 tonnes. Total open interest increased by 809 tonnes to 10,996 tonnes. November open interest dropped by 1,991 tonnes to 3,441 tonnes while that of December and January increased by 2,585 tonnes 204 tonnes respectively to 6,909 tonnes and 562 tonnes.

Spot prices

Spot prices, however, remained unchanged at the weekend at Rs 14,100(un-garbled) and Rs 14,600 (MG 1) a quintal. India closed lower but other origins more or less unchanged. Prices quoted for different origins per tonne c&f New York at the week-end were MG1 Asta: $3,375-$3,475; Vietnam Asta $3,300; Lampong Asta $3,300; Brazil Asta $3,000; MLSVB spot $3,300 (non-Asta); MLSVB Asta $3,500 ex-warehouse New York/New Jersey; MLS Asta deliveries:$3,600 Jan/Feb. Vietnam 400 GL $2,800 (f.o.b.); Brazil 500 GL and 550 GL$2,800 and $2,900 (f.o.b.) respectively. White pepper Vietnam double washed: $4,300-$4,400 and Muntok: $4,850 a tonne.

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