Pepper market sees high level of ‘circular trading’
Pepper market last week witnessed high level of ‘circular trading’ and consequent high volatility due to the tug of war between both the bull and bear operators. Prices of futures contracts showed a mixed trend with marginal up and down, market sources told Business Line.
Expert analysts were, of late, spreading bearish propaganda of an easier Vietnam pepper market as its new crop is expected to hit the markets in January, while the arrival of new Indian crop is to pick up in a good way in December because of the favourable weather conditions prevailing, at present. There was also propaganda that Vietnam was offering light pepper at $6,200 a tonne and the landed cost of which would come to Rs 322 a kg. At the same time, Vietnam was offering FAQ 500 GL at $6,800 a tonne.
Sellers were limited and the availability of high bulk density pepper continued to remain tight. The domestic demand from up country, despite it being the grinding/crushing and winter season, has been slow because of the supply of pepper bought earlier at low prices by stockists in north Indian centres.
Meanwhile, overseas buyers are also confused over the high volatility here and bearish reports. Hence they are holding back anticipating that prices would decline when the Indian new crop hits the market this month and the arrival of Vietnam crop in Jan/Feb.
Currently, availability is, by and large, confined to India and to some extent Brazil. Vietnam was offering lower grade material and prices of which were eased slightly in line with the declining trend in the Indian futures market.
And yet, Indian parity continued to remain competitive in the world market for some time now at around $7,350 a tonne (c&f) for Europe and about $7,650 a tonne (c&f) for the US. Indian parity, because of the bearish activities on the exchange pushing down the prices in the futures market coupled with the weakening of the rupee continuously, had became attractive and some orders were thus coming to India, they said.
The Dec and Jan contracts were marginally up at the weekend close while that of Feb showed a decline.
Dec and Jan moved up by Rs 300 and Rs 95 a kg respectively to close at Rs 35,150 and Rs 34,890 a quintal. Feb declined by Rs 65 to close at Rs 34,755 a quintal Saturday last.
Total turnover during last week fell by 2,337 tonnes to close at 23,631 tonnes. Total open interest dropped by 95 tonnes during last week.
Spot prices during the week were down by Rs 200 and closed at Rs 33,100 (ungarbled) and Rs 34,600 (MG 1) a quintal.
If the estimates/projections for this year and next year made by the International Pepper Community (IPC) turns out to be true then there could be slight mismatch in demand and supply early next year also.
India is the major consumer of pepper and its domestic consumption is projected at 40,000 tonnes by the IPC.
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