Date:28/03/2006 URL: http://www.thehindubusinessline.com/2006/03/28/stories/2006032803401900.htm

Back Dull phase in pepper trade

G.K. Nair

Subsidy may activate market

Kochi , March 27

The pepper market is passing through dullness mainly due to financial crunch faced by exporting community on non-refund of sales tax by the Kerala government.

This has weakened the trading activities, which arereflected on the prices that remained by and large stable. At the same time, uncertainty over the extension of subsidy has also contributed to the present dullness. Now, only those committed for March delivery were seeing some activity.

According to the Commerce Ministry sources, the Government was considering extension of subsidy beyond March 31, as only around 4,000 tonnes of black pepper could be exported as against the targeted 20,000 tonnes.

Futures prices are also coming down because of March liquidation. Anticipating extension of subsidy, based on latest reports, some movement is seen in the market now.

International demand is slow, as Vietnam pepper has entered the market with its new crop at competitive price. Yet, there are said to be some enquiries for April, May and June deliveries.

Exporters say that they could commit only if the subsidy is extended. Demand could be forthcoming from certain pockets in the world market. But, our prices have to remain at moderate levels with reasonable premium, market sources said.

Vietnam is offering ASTA grade at $1575-$1600 C&F while Indonesia at $1,650, Brazil at $1,700 as against Indian parity of $1,725 a tonne. Exporters claim that subsidy would help the Indian price to be competitive in the world market.

Given this scenario extension of subsidy might push up export buying and a consequent upward trend in prices.