NMCE Agro Outlook Aug 7, 2008

Pepper futures in NMCE moved up on strong domestic demand. New arrivals from Indonesia and Brazil restricted the gains. Indonesia and Brazil, two of the largest producers, harvesting started in July and will continue through August. In the case of the Indonesian crop, harvesting is reportedly lower than the previous year. On the other hand, the restrictions imposed by the US Food and Drug Administration (FDA) on Brazilian black pepper due to the alleged presence of Salmonala. Kerala, the largest producer of pepper in the country, has received 43 percent lower rainfall compared to its long-term average during June 1 to July 23 period; increase the fear of production shortfall during the next season. 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. In Vietnam, the largest producer and exporter, harvesting ended in June while in India, harvesting starts in December and continues to February. Arrivals in the physical market were about 20-30 tonnes from about 40 tonnes last week.

August contract in NMCE traded in the range of Rs. 140.51– Rs. 142.50 and closed at 142.10 (141.35). Combined volume stood at 1376. Open interest decreased by 64 to 433. Pepper inventories in the NMCE accredited warehouses decreased by 10MT to 1471 metric tonnes. Pepper spot price quoted at 14500 rupees increased by 100 rupees per quintal, in Kochi.

INTRADAY OUTLOOK

NMCE Pepper (August) bullish above 141.93 next levels are 142.85 and 144.14. Bearish below 141.20 Next levels are 140.00 and 138.80.

TECHNICALS –NMCE-(INTRADAY-CALLS)

Pepper (August) Bullish above 141.93 bearish below 141.20.