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Updated: December 10, 2012 09:17 IST

Pepper prices may marginally decline in futures market: study

B. S. Satish Kumar
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Pepper is popularly known as black gold as it has global commercial importance. Photo: K.K.Mustafah
Pepper is popularly known as black gold as it has global commercial importance. Photo: K.K.Mustafah

However, the tight supply in domestic markets and good domestic demand ahead of festivals could limit the fall in pepper prices.

A price forecast study has indicated that Indian black pepper prices may marginally decline in the coming months in the futures market owing to the twin impact of the weak demand for the Indian produce in the export market and the increase in imports of cheaper produce from Sri Lanka and Vietnam.

However, the tight supply in domestic markets and good domestic demand ahead of festivals could limit the fall in pepper prices, according to a price analyses conducted by the Market Intelligence Centre of the University of Agricultural Sciences, Bangalore.

The study, which is based on data for the last 11 years from Gonikoppal and Sakleshpur markets and a survey of the pepper traders besides an econometric analysis, has tried to forecast the prices till March 2013.

Price during harvest

According to the study, black pepper prices are in the range of Rs. 360-Rs.390 a kg during the harvest. The good yield prospects and lower uptake by international buyers may prevent the prices from crossing the Rs. 400-mark, according to C.P. Gracy, Principal Investigator of the UAS, Bangalore’s Market Intelligence Centre.

She hastens to add that the forecast is based on the current market sentiments and could vary with any changes in the market situation and EXIM policies.

The study points out that the demand for Indian pepper in the international markets has remained low due to price disparity. Pepper shipments from India to the international market were being quoted at $ 8,475-$ 8,600 a tonne, while the produce from Indonesia and Vietnam was available for about $ 1,500 a tonne lower than the Indian prices.

What has made the situation complex for India is that global pepper production is expected to increase by 7.2 per cent to touch 3.20 lakh tonnes this year with a sharp rise in Brazilian, Indonesian and Vietnamese output.

According to the study, the domestic consumption of black pepper in 2012 is expected to be 42,500 tonnes while the exports are estimated to be around 17,500 tonnes. India has slipped from the fourth position to the fifth in the global pepper exports’ market, behind Vietnam, Indonesia, Brazil and Malaysia, according to the International Pepper Community’s estimates for this year.

Imports

According to report from traders, India’s pepper import in 2012-13 is expected to increase by 50 per cent compared with the last year to touch 26,000 tonnes, the study notes.

The study has advised farmers to release the stock slowly into the market to keep the prices firm. The escalation in cost of production of black pepper also has put pressure on spot pepper prices this year.

Pepper is popularly known as black gold as it has global commercial importance. Kerala leads in pepper production in India by accounting for over 60 per cent of the country’s production, followed by Karnataka and Tamil Nadu. In Karnataka, the major pepper production comes from Kodagu, Hassan, Chikmagalur and Uttara Kannada.

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