G.K. Nair

Kochi , Nov. 24

TIGHT supply has pushed up spot pepper prices by Rs 250 a quintal during the last three days in the terminal market here.

The futures also witnessed an upward trend up to Rs 500 a quintal. Spot pepper prices increased by Rs 250 a quintal on Thursday with the MG1 price rising to Rs 6,900 and un-garbled to Rs 6,650 a quintal from Rs 6,650 and Rs 6,250 a quintal respectively during the weekend.

The futures also increased on Thursday from the weekend prices. December delivery was quoted at Rs 7,155 a quintal as against Rs 6,660 last Saturday. January Rs 7,365 (Rs 6,855), February Rs 7,546 (Rs 7,023), March Rs 7,591 (Rs 7,065) and April Rs 7,690 (Rs 7,157).Attributing the current trend to "absence of selling pressure in Kerala," the major producer and where farmers could afford to hold back their produce for long, market sources said there was good demand from the domestic market as supply from Sri Lanka has weakened.

Meanwhile, supply from Karnataka, which was catering to the demands in the North at a price of Rs 67 anywhere in the country, has also narrowed down probably because of exhaustion of the stock, they said.

Added to this, there were reports that production in the coming season is likely to decline by 30 per cent due to the negative impact caused by incessant and widespread heavy rains on the crop in the growing regions.

Besides, a group of speculators believing in astrological predictions that prices of the black coloured spices would shoot up in the coming months were investing heavily in this commodity in both the spot and futures market. To tighten the supply further, arrivals from Sri Lanka have narrowed down as the stock in the island is said to have been exhausted. They have also raised the price to $1,450 a tonne. Thus, short supplies, on the one hand, and good demand, on the other, have helped prices to move up, they said.

In the international market also, supply was not forthcoming as most of producers are either holding back or have no stock. The Indian parity at present has gone up to $1500-$1550 a tonne from $1,400-1,450 a tonne.

Vietnam is reported to have no ASTA grade pepper to offer, while Indonesia is believed to have exhausted its crop. Brazil is also not aggressive in selling now, they said.

The situation seems to have compelled the international players who have been waiting for the prices to come down to meet their immediate requirements. Thus, India appears to be in an advantageous position and that could continue till the Vietnamese pepper hits the market in late March/April, sources said.

Meanwhile, Mr Thomas Philip, President, All India Spices Exporters Forum, told Business Line, "All markets are cyclical and as the pepper prices had reached the level of farmers' resistance it has to move up now."

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