Pepper prices to fall further

James Paul
24 November 2003

Kochi: Pepper prices, which remained at Rs 65 per kg last week following a crash in both the spot and futures market, are expected to fall further. Market sources anticipate a glut in the pepper market in the absence of both domestic demand and international support.

Buyers from the North have been lately shying away or rather sourcing the commodity from Sri Lanka while buyers from abroad consider the price of Indian pepper to be too high.

The situation is expected to worsen with the arrival of around 45,000 tonnes of new crop into the market in addition to the carry-forward stock of 25,000 tonnes. In the wake of the possible glut, the prices are likely to crash further. The anticipation of a glut and further fall in price could also prompt liquidation of stocks. This could harm growers, say trade sources.

Some traders in the futures market were reported to have already bought a good quantity. Holding on to stocks or rather 'investing' in them has been considered a viable proposition owing to low interests rates, which gives the trader the option of selling off his stock when prices rise. India is no more in an advantageous position in the international market unlike in the past. The competitors have entered the markets with their stocks in a big way.

Estimates of the International Pepper Community (IPC) show that the year 2004 should start with the previous year's carry-forward stock of 60,384 tonnes, which is less by only 5,315 tonnes brought forward from 2002. The stock brought forward in 2002 from the previous year was 55,839 tonnes.

Production during 2004 will be higher at 3,26,500 tonnes than the estimated 3,22,800 tonnes. Incidentally, the contribution of the non-IPC countries will be up to 1,31,000 tonnes compared to 1,27,500 tonnes in 2003.