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Pepper futures last week turned hot on strong demand amid tight availability and some speculative activities.
As the imports of pepper have become costly, the value addition industry had to buy from the indigenous sources.
That phenomenon coupled with the strong upcountry demand pushed the prices, market sources said.
Heavy rains in the growing areas in Kerala and Karnataka have stopped arrival of the materials, they said. Many in the upcountry markets have been buying only limited quantities earlier anticipating the price would fall when the new crop hit the market. But, contrary to their expectations, the prices ruled firm most of the time.
Vietnam is reported to have exported an estimated 85,000 tonnes in January-June this year. Hence, the Vietnamese growers may not sell at lower rates.
Indonesia has been silent as its new crop is expected to hit the market by mid-July. Next crop of Brazil may hit the market by late September-early Oct.
Given this scenario, the main source of supply, currently apart from Vietnam, is India and if the Indian prices remained competitive some business could come for the Malabar in the coming days.
At the same time, availability of physical pepper might turn out to be a problem.
The situation might benefit those who have their stocks locked up in the warehouses since end-last year as the prices have now reached their expected levels.
Last week, on the National Multi Commodity Exchange (NMCE) July, Aug and Sep soared by Rs 2,112, Rs 2,106 and Rs 1,962 a quintal respectively to close on Saturday at Rs 40,929, Rs 41,000 and Rs 40,701.
Where as, on the IPSTA, these three active contracts increased by Rs 3,000, Rs 2,940 and Rs 2,940 a quintal respectively to close at Rs 40,435, Rs 40,313 and Rs 40,314.
Spot prices shot up by Rs 3,800 to close at Rs 39,500 (ungarbled) and Rs 41,000 (garbled) on strong demand amid tight supply.
Indian parity in the international market was at $7,050 a tonne (c&) for Europe and around $7,200 a tonne (c&f) for the US at July prices.
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