Date:15/08/2006 URL: http://www.thehindubusinessline.com/2006/08/15/stories/2006081500321300.htm

Back Declining trend continues in pepper

G K Nair

Primary markets face bull liquidation and selling pressure due to Onam festival

Kochi , Aug. 14

Pepper futures market on Monday declined further on bull liquidation and selling pressure in some of the primary markets due to the ensuing Onam festivals.

Bulls were liquidating their position on the exchanges. Meanwhile, active bearish operations were there to push the prices down, market sources said.

Fall on NCDEX, NMCE

As a result, all the futures contracts witnessed a sharp fall on Monday. The August position on National Commodity & Derivatives Exchange Ltd (NCDEX) dropped by Rs 293 a quintal to close at Rs 9,839 from Rs 10,132 on last Saturday. On National Multi Commodity Exchange (NMCE), the decline was by Rs 544 to close at Rs 9,556 from Rs 10,100 a quintal. The open interest for August dropped by 687 tonnes on NCDEX.

The drop in other positions on NCDEX was from Rs 255 to Rs 309 a quintal, while on NMCE it was from Rs 321 to Rs 441 a quintal.

The total turn over on NCDEX improved by 2,687 tonnes to 15,694 tonnes from 13,007 tonnes, while on NMCE it increased by 2,179 tonnes to 4,258 tonne from 2,079 tonnes.

Wait and watch

However, in the international market the buyers are just "waiting and watching". Indonesia was active and firmer. Lampong Asta was reportedly being sold at $2,350 f.o.b ($2,500 (c&f) a tonne. But, there were said to be no buyers and sellers at this level, they pointed out. In fact, no firm offer was emanating from all the origins. Given this situation, how the US and European markets were going to react is yet to be seen. The persistent firm price at all the origins, where the commodity was available, could be viewed as the prevailing tight supply position, they said.

The Indian parity was at $2,325 a tonne (c&f) US. Because of the export subsidy available "our price is competitive and hence there is a potential for shipments from the country", they said. Those who had earlier commitments, however, were said to be buying.

The produce sold in the plains of Kerala, such as Kannur, Kasargode, Malapuram, Pathanamthitta and Kollam districts by small growers were of inferior quality and hence the sales were taking place at discounted price. Sales of good quality pepper in Wayanad and Idukki districts were of limited quantity, they said.

The domestic demand was weak and that has been almost met by supplies from Kodagu at Rs 98 - 99 a kg anywhere in India. The selling pressure in the primary markets has pushed the spot prices down by Rs 200 a quintal to Rs 9,300 (un-garbled) and Rs 9,700 (MG 1).