Fundamental Analysis

In the short term prices will trade in sideways to up manner as the farmers in the domestic market are not ready to sell their produce at lower levels. The other factor which will determine the pepper prices in the short term is the pepper price parity in the international market of various origins.

Vietnam have already exported around 61,000 tonnes of pepper from its availability of 1,15,000 tonnes. Thus it may not aggressively sell its produce. Further, farmers at the domestic market are not ready to sell the produce at lower levels. This will control the prices from falling sharply down.

Pepper production in Indonesia is expected to be 22-25 thousand tonnes compared to 30-32 thousand tonnes in 2009-2010. Not much of the carryover stocks are present with the nation. In first four months it exported around 5,937mt of pepper to U.S., being the most important source of pepper.

In the medium to long term (July onwards) prices will depend on the pepper stocks in Vietnam and Brazil. Demand from the overseas and domestic buyers.

Technical Analysis

Prices closed above its 10-Day and its 20-Day EMA indicating upward trend.

The 14-Day RSI is at 55.4 and is in the neutral zone.

Outlook:

Pepper prices in the intraday are expected to trade in sideways to up manner due to lower availability with the stockists. In the short term (June) Pepper prices will depend on demand from the domestic and overseas buyers and price parity of the various pepper origins especially Vietnam, India and Indonesia. In the medium to long term (July onwards) prices is likely to take cues from demand from the overseas and domestic market, pepper production in Indonesia and Brazil.

Courtesy: Angel Commodities

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