PEPPER

Pepper Aug contract at NCDEX gain marginally by 0.2% on low rainfall in major growing regions and weak arrivals in the spot market, but sluggish export demand capped the gains. Farmers are not selling at this level and they are holding back their stocks on hopes of further price rise. Arrivals in the spot market were about 20 tones, compared with about 30-40 tones last week. However, weak export demand tracking fresh arrivals in Indonesia and Brazil, which started in July, capped some of the gains.

Low rainfall in major growing regions also supported the market. Kerala, the largest producer, has received 28 percent lower rainfall during June 1-July 2, compared with its long-term average, according to the weather department. Kerala contributes about 90% of the total production. The plant needs well distributed rain for better flowering, which normally happens during June and July.

Output in Brazil is expected to be 15-20% higher than last year, which also weighed on the sentiment. Arrivals in Indonesia and Brazil, two of the largest producers and exporters, will start in July.

Sharp fall in prices is not expected and the market will again start rising on expected supply crunch in the second half of 2008. Stocks at NCDEX warehouses were 3689 tons as per latest update against 3515 tons on Dec 4, weight on sentiment from sharp rally.

In India, pepper is sown in May-June and is harvested during Dec-Feb. The output is likely to be 50,000 tones in 2008, according to the Spices Board. Exporters are also not getting enough stocks in the market as arrivals have almost dried up, adding total carryover stocks are estimated at only 8,000-9,000 tones.

Spices board officials said global pepper supplies are expected to be ard 329,000 tons this year while demand is estimated at 376,500 tons leaving a deficit of 47,500 tons.

According to the Pepper Trade Board, The global production of black pepper has been recorded at 259,500 tones while carry-forward stocks as on January 01 were 85,000 tones. Thus, the total availability of black pepper will be of 344,500 tones. The total demand this year is expected to be around 3.05 lakh tones. This means, the carry-forward stocks in 2009 will be of 39,000 tones.

While as per last statement from chairman of Indonesia Pepper association said, total global pepper supply for this year is expected to 2,70,000 tons against global demand of 3,76,500. This will create shortfall of almost 1L tons globally, support prices at every low.

According to pepper board, Vietnam world’s third largest Pepper producer produced 86,000 tones of Black pepper and carry forward stock as on jan 1 was 10,000 tones against 1,00,000 tons produce last year. Vietnam’s lower production will tighten global pepper supplies as the Southeast Asian country last year sold more than half the spices traded in the world market.

According to the Pepper Trade Board, Brazil's output in black pepper stood at 39,500 tones and carry-forward stock at 12,000 tones. While Indonesia produced 20,000 tones of black pepper and 6,000 tones of white pepper, thus making the total output of 26,000 tones. Carry-forward stock of black pepper in Indonesia was of 9,000 tones and that of white pepper at 3,000 tones. Malaysia recorded a production of 13,000 tones of black pepper and 4,000 tones of white pepper. Carry-forward stock in Malaysia was of 5,000 tones.

Harvesting in Malaysia, fourth largest pepper producer start in July while in India it’s from Jan to Mar month. Harvest begins in late July in Indonesia, September in Brazil and December in India.

According to the Pepper Trade Board, The production of black and white pepper in other countries was as follows: Sri Lanka: 9,000 tn; Madagaskar 1,500 tn: Equador: 1,800 tn; Combodia: 7,000 tn; China: 20,000 tn; and Thailand: 3,000 tn. The total production by these countries is of 42,300 tones. Carry-forward stocks in these countries as on January 01 was of 4,000 tones.

India commands 47% by volume and 40% in value of the world's spice trade, according to the industry body Spices Board. Vietnam is the world’s largest producer & exporter for black pepper, while India contributes about 20% of total production