Pepper prices likely to hot up

December 31, 2011 12:31 am | Updated 12:33 am IST - KOCHI:

Bush Pepper ready for harvesting in a farm house near Kochi in Kerala. File Photo: K.K. Mustafah

Bush Pepper ready for harvesting in a farm house near Kochi in Kerala. File Photo: K.K. Mustafah

As the new pepper season gets off to a start, a survey conducted by the Agricultural Market Intelligence Centre of Kerala Agricultural University (KAU) predicts that prices are likely to perk up in the new season. The survey said that the present volatility in the market was due to speculators offloading their stocks and resorting to circular trade to create pressure. At one point of time, uncertainties in the stock markets might have driven speculators to look at pepper as a safe haven. The survey foresees a supply squeeze triggered by erratic weather conditions, shrinking acreage under pepper and declining productivity in the major growing tracts of Kerala. Crop prospects in Kerala are lower than normal, said the survey, which quoted the International Pepper Community (IPC) estimates for global pepper production during 2012 as being around 3.20 lakh tonnes against 2.98 lakh tonnes during 2011.

“This represents a mere 7 per cent increase in production prospect which will be offset by the increased consumption and low carryover stock from last year,” the KAU survey said. Only Vietnam, among the IPC members, did have an optimistic outlook on production in 2012. Vietnam and Indonesia are expected to produce an estimated 1.10 lakh tonnes and 41,000 tonnes, respectively during 2012. Vietnam has exported 1.15 lakh tonnes and imported only 20,000 tonnes in 2011, indicating a low carryover stock, the survey said.

The survey cited the Directorate of Cocoa, Arecanut and Spices Development in Kozhikode as estimating pepper production in India during 2012 at 43,000 tonnes, lower by about 5,000 tonnes compared to the previous year, a drop of more than 10 per cent.

Spices Board figures reveal that pepper exports were 13,750 tonnes in April-October this year, an increase of 33 per cent. Most farmers in Kerala are believed to have liquidated their stocks when prices ruled high. There is little possibility of carryover stocks coming into the market in the new season.

On the other hand, import of pepper will not be attractive because of a weakened rupee while exports will be of advantage to the trade, the survey said.

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