Pepper rates too moved up along with Jeera as overall Fundamentals remained Bullish. Lower production aspects in Indian and International markets, low stocks in country like Vietnam, rising export and domestic demand have been keeping sentiments firm in the Indian markets.

The IPC (International Pepper Community) has lowered 2010 world pepper output by 9,000 tonnes to 2,70,650 tonnes as compared to 2,79,650 tonnes in 2009. Adverse weather condition in Brazil, Indonesia and Vietnam resulted into drop in output.

Apart from that, there are reports that Vietnam has sold most of its crops and is left with lower stocks. The Indian output too has been reportedly been adversely affected as farmers have shifted to more profitable crops.

Exports from the Indian sub­continent from US and China rose due to better quality. Arrivals remained weak as traders anticipated further rise in rates in the coming months. Firmness in Dollar vs Re further added to the export demand. Reports of delayed harvesting in Brazil for the new crop also added to the bullish sentiments.

The crop is expected to hit during end October. The International market trend is thus expected to remain firm in the coming weeks. Latest reports from Spice Board of India indicates the exports for the period April June have fallen by 5% to 4,650 MT in 2010 from 4,900 MT in 2009.

In the Indian markets, weak stocks in the International markets have shifted demand to this country. The domestic demand has also risen and expected to rise further in coming weeks from the Festival season ahead.

Thus overall outlook from a medium term point of view is looking bullish but due to the high current rates prevailing in the markets, there are always possibilities of intermittent profit booking.

Volumes in Spices especially Pepper have shot up due to the high Bullish trend witnessed and a weak stock could flare up the prices further if exports continue to rise in the Indian markets. One can thus witness some very high volatility in this counter in the coming weeks.

Courtesy: Religare Commodities

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