Black Pepper

Global supply scarcity and hoarding at the domestic market to keep Black Pepper prices firm.

Black Pepper, the ancient spice of India witnessed a surge of 8.56 percent in this week due to global scarcity and hoardings by the farmers in the domestic market.. Global Black Pepper production is expected to be lower at 2.79 lakh tonnes in 2009-10 as compared to 2.81 lakh tonnes in 2008-09. Pepper production in Vietnam -90000 tonnes in 2010 as compared to 135000 tonnes in 2009. Vietnam exported around 61000 tonnes till May 2010. Thus it may not be having enough stocks to sell. Pepper production in Indonesia is expected to be 22-25 thousand tonnes compared to 30-32 thousand tonnes in 2009- 2010. Not much of the carry over stocks are present with the nation. Exports from Indonesia stood at 50,640 tonnes of pepper as compared to 52410 tonnes in 2008. In first four months it exported around 5,937mt of pepper to U.S. being the most important source of pepper.

According to Spices Board, Black Pepper production in India is projected at 45,000 tonnes as compared to 48,000 tonnes in 2008-09. However, Black pepper production is expected to be lower than 45,000 tonnes in this year according to market source. Pepper exports from India fell by 22 percent to 19,750 tonnes in April-March 2009/10 from the year-earlier period as exports to main consuming countries such as the U.S. and Europe declined.

Demand from the overseas buyers especially from U.S.A. improved in the months of April to May 2010 providing support to the prices. Import of Black Pepper in U.S. from January to April 2010 stood at 19,568 tonnes as compared to 18,567 tonnes in the same period previous year. Indonesia maintained its position as the most important supplier to U.S. The reason behind being the major supplier is the lower quotes offered by them (Indonesia).

Currently according to the above statistics much of the stocks are not left with Vietnam and Indonesia. This will be friendly for the domestic price trend. Arrivals at the spot market have declined in this week to 30 tonnes as compared to 45-50 tonnes in the last fortnight. Farmers in the domestic market have earned good profits from the sale of Cardamom and Coffee so they are not in hurry to sell their produce at lower levels.

Price Trend of Black Pepper
Prices at the spot markets surged by 4.83 percent due to reduced arrivals and better offtakes by the local stockists. Internationally price of Black pepper of Indian origin surged from $3550/ tonne to $3950/tonne whereas Vietnam pepper prices were quoting around $3750/tonne. Prices at the futures traced the domestic fundamentals and surged by Rs.1,400/qtl.

Outlook
Black Pepper prices will remain firm in the coming days due to lower global availability of pepper with the major producers such as Vietnam and India. Further demand from the overseas will creep to India as Vietnam will hoard the stocks of pepper and will not readily sell its commodity till the fresh arrivals in next year. Brazil fresh crop is expected in September and they too don't have much pepper stocks. In the medium to long term domestic prices will take cues from the pepper production in Brazil and demand from the overseas buyers.
Technically, prices will find strong support at 17200 levels and thereafter 16640 levels. Resistance may be seen at 18300 levels and thereafter at 18500 levels. Any correction at the downside is good opportunity to buy.