Commodity Online
KOCHI: Is there volatility in India’s pepper futures? It was down on the National Commodity & Derivatives Exchange Ltd (NCDEX) on Thursday as prices corrected from a near two-week high hit the previous day.
Analysts differ in their interpretation of the market, while some say the movements on the downside are short term corrections others have pointed out that black pepper prices were reacting to certain news about possible ban on agri-futures and that fundamentals for the spices was strong.
The demand amongst the domestic grinders and traders has declined as the grinders are seen lowering their inventory levels. However sellers too have no inventory and the pipeline is empty which indicates huge supply crunch in the market.
“Pepper Futures September contract over the past few days have witnessed rangebound movement. It moved in the range of 14200-14700/quintal. However, rumors of curbs on Futures trading in commodities led all Agri commodities to fall sharply on Friday,” according to Nalini Rao, Research Analyst (Spices) at Angel Commodities, Mumbai.
As far as the domestic market is concerned the favourable factor is the festivals that are to start by mid-August with Raksha Bandhan, spurring higher demand.
Also, global production this year of 259,000 tonnes, lower than the demand of 305,000 tonnes, according to Vietnam Pepper Association, has cast a bullish sentiment over prices, analysts said.
In Kochi, the two-day strike at the Cochin Port also contributed to the slowdown in export buying during the mid-week.
“Spot prices at Kochi traded at steady rates till Thursday but declined by Rs.200/quintal on Friday tracking Futures as well as lower quotes of pepper by Brazil in the international market. Also, there were reports of raids by Forward Market Commission in Chennai on “bucket shops” conducting “dabba trading” which pressurized the prices,” Nalini Rao commented.
Indian parity was quoting at around $3500-$3550/tonne (C&F), Vietnam ASTA was quoting at around $3525/tonne (C&F) whereas Brazil was quoting at lower levels of $3025/tonne (f.o.b.). Fresh Pepper arrivals from Brazil is expected to hit the market in the month of September and the Indonesian Pepper fresh arrivals have started coming in the market, she added.
In India, farmers as well as stockists are hoarding pepper stocks in anticipation of a rise in the prices in the coming weeks. They are not selling Pepper even at Rs.140/kg at farm gate levels. Thus, spot prices at Kochi may not fall much
In the near term Pepper prices on Futures may witness sideways to down trend. Initial support can be seen at 13900 levels and thereafter at 13400. Resistance is seen at 14460 levels and then at 14600, Nalini Rao said.
