NMCE Agro Outlook Aug 30, 2008

Pepper futures in NMCE pared early gains and settled lower on sluggish export demand due to lower prices in other origins and good rainfall in major growing regions like Kerala. Major growing areas were receiving good showers which may boost out for the next year. Pepper plant needs rain at regular intervals for better flowering, which normally happens during July and August.

According to Vietnam Pepper Association, global pepper production this year would be 259,000 tonnes, much lower than the demand of 305,000 tonnes. Arrivals from Indonesia and Brazil remain negative for price movements. Indonesia and Brazil, two of the largest producers, harvesting started in July and will continue through August. Production in Vietnam in 2008 was lower than last year, which has raised hopes of a price rise in near future.

According to the spices board India produced about 50,000 tonnes of pepper in 2007- 08, almost equal to the output a year ago, however Indian pepper exports during the first three months fell 12.2 percent to 7,550 tonnes.

However, Vietnam's exports during Jan-Aug period rose 11 percent to 66,200 tonnes. In Vietnam, harvesting ended in June while in India, harvesting starts in December and continues to February. India is the world's second largest pepper producer and exporter, while Vietnam is the biggest producer.

September contract in NMCE traded in the range of Rs. 140.06– Rs. 141.98 and closed at 140.38 (141.00). Combined volume stood at 748. Open interest decreased by 20 to 744. Pepper inventories in the NMCE accredited warehouses increased by 10MT to 1436 metric tonnes. Pepper spot price unchanged at 14200 rupees per quintal, in Kochi.

INTRADAY OUTLOOK

NMCE Pepper (September) bullish above 141.05 next levels are 141.87 and 143.15. Bearish below 140.35 Next levels are 139.38 and 138.15.

TECHNICALS –NMCE-(INTRADAY-CALLS)

Pepper (September) Bullish above 141.05 bearish below 140.35.

Courtesy: JRG Wealth Management