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G.K. Nair

KOCHI, May 27

PEPPER market remained steady on good domestic demand and short supply. However, there was no overseas demand as the buyers there are adopting a wait and watch approach.

Arrivals at the terminal market continued to be thin at around 10 tonnes a week. Normally, the last week of May witnesses selling pressure in view of re-opening of the schools after annual vacation. However, this year so far no such trend has been visible, according to market sources.

"It seems that the farmers are holding back stock anticipating an increase in the price following the reported decline in pepper production in Brazil and the rains in Sri Lanka", the sources told Business Line. The upcountry demand is being met by direct buying from the primary market.

Spot pepper prices on Tuesday remained at the weekend level of Rs 7,900 per quintal for MG1 and Rs 7,600 for ungarbled.

Futures price witnessed a marginal difference. June was quoted Rs 7,675 per quintal as against Rs 7690 during the weekend. July was Rs 7,900 (Rs 7,900), August Rs 8,100 (Rs 8,100), September Rs 8,275 (Rs 8,250), October Rs 8,400 (Rs 8,425) and November Rs 8,350 (Rs 8,300).

According to international operators, "a firmer price trend surfacing from Vietnam on FAQ grade and some nearby support of ASTA shipment offers put back some much needed life into the black pepper market".

With all the discussions of a global surplus on pepper, people were remembering the technical strengthening during the first half of 2002. In an effort to avoid possible squeeze, some operators chose to take coverage pushing up prices from most fronts, they said. There have been at least two reports projecting a world oversupply which has dampened an already reticent market, they said. But both have cautioned the impact might not be apparent until late in the year or possibly next year. Perhaps this realisation was behind some buyers finally stepping in toward the close of the week.

Fundamentally, Vietnam's strength, despite its inventories, suggests there is the holding power to restrict outflow of stocks for a good part of this year. Without such pressure, other origins have limited near term material, most probably until well into the summer at least. "Inventories will have to be closely monitored as we move into our heavy grinding period with deeper origin stocks looming," the sources said.

Meanwhile, another report said pepper market continued to be steady, but trading was limited.

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