High prices predicted for pepper

Published: 02nd July 2012 11:56 AM  |   Last Updated: 02nd July 2012 11:56 AM   |  A+A-

Kerala Agricultural University’s (KAU) Agricultural Market Intelligence Centre (AMIC) has indicated that pepper prices may remain hot in the coming months owing to increased demand in the domestic market and shortfall in production.

According to AMIC’s market survey and econometric analysis, based on the spot price of pepper in Kochi for 17 years from January 1995 to June 2012, pepper prices may rule firm.

The prices for ungarbled black pepper may remain Rs 385-410 per kg in July, Rs 410-425 in August and Rs 415-435 in September.

AMIC also warned against intensive speculation being systematically circulated to put pressure on the market to generate panic and create selling pressure.

It emphasised on some of the market sentiments that point to pepper prices possibly moving northwards during the latter half of the current season.

According to AMIC, Vietnam is believed to have off-loaded around 62,000 tonnes of their produce as of now, which is more or less the same during the corresponding period in the last year. Conflicting reports are also being propagated on the Indonesian crop. The harvests are being concluded, but trade circles put it below the official estimate of 41,000 tonnes owing to erratic climate. The speculation will be clarified by the beginning of August.

Despite the Eurozone crisis and exchange-rate volatility making exporters extra cautious, the stronger dollar will stimulate exports. Contrarily, the weakening rupee will restrict liberal imports from competing countries because of costlier import parity, especially in view of strong and steady price signals in other origins also, it said.

With the staggered delivery clause in future trading becoming effective from May 14, this option is being offered to ensure that speculators would not hold naked positions when the contract begins to expire and will have to be prepared to accept deliveries.

This has reduced excessive speculation and circular trading in the exchange platform. The coming North Indian festival season and winter months drive the domestic demand. Most of the small-scale and marginal farmers have already sold a large chunk of their stock when prices crossed Rs 400 range.

Only large-scale farmers and estates are holding stock anticipating a price improvement proportionate to the festival demand. Hence, arrivals in the physical market are thin now. The sellers resorted to need-based liquidation in the physical market when schools reopened in June.

Higher cardamom prices offer better leverage to farmers in Idukki unwilling to part with the crop at less than Rs 400 per kg. The erratic climate is already indicating a poor crop for the next season, AMIC said. Thus, there is no selling pressure.

The foreign exchange volatility and policy uncertainty has compelled buyers and sellers to adopt a ‘wait and watch’ policy.

However, policy corrections and exchange rate adjustments are inevitable as the market makes its own corrections to move forward, the report said.


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