Commodity Online
The market witnessed high volatility in the futures on last month and prices were pressured by the low export demand due to the disparity of domestic and international prices.

It was low stock of pepper in the country that seemed to determine the course of the price movement rather than speculative trading in futures. Rainfall has been good in major growing regions like Kerala and it is likely to increase the output in the next season. Sluggish demand in the spot market also added pressure on pepper prices, though fundamentals are remaining unchanged.

According to market sources, the spot pepper market witnessed a bearish note due to a drop in futures. At the same time, no export orders were forthcoming from overseas markets.

There was no demand from USA but this is expected to pick up only after September. Also, Vietnamese and Brazilian variety of pepper was selling at a much lower rate than Indian pepper price in the international market. India's production was steady last year, but due to a global shortage the country exported most of its stocks, pepper arrivals start in December and continue through February.

Vietnam, the world's largest pepper producer, has completed harvesting up to 87,000 tonnes of the spice, down from 90,300 tonnes last year, and has exported around 58,000 tonnes of pepper during January-July 2008.

Meanwhile, according to the report from Vietnam, there will be a tight supply situation from end September 2008 till the new crop starting from February 2009 in Vietnam. Estimated carry over stock for the year 2009 should be about 10,000 tonnes. Vietnam has projected its output for 2008 as about 90,000-95,000 tonnes.

According to Vietnam Pepper Association, global pepper production this year would be 259,000 tonnes, much lower than the demand of 305,000 tonnes. International Pepper Community (IPC) projected shortage of 54,000 tonnes for the next year.

Traders were holding back stocks in anticipation of price increase in the coming months. Fresh arrivals from Indonesia and Brazil were expected to hit the market by October. The Weaker rupee is encouraging Indian exporters, it was the peak consumption season for India and October-December would be the period of high demand in the global market.

Average MACD is below the zero line of the indicator, suggesting short-term bearishness of the counter. Only a crossover of the average above the zero line would signal a bullish reversal again. Prices are below the short term 9 day EMA and 21 day EMA, supporting the bearishness of the commodity. RSI is moving in the neutral zone from the oversold region.

Therefore, pepper prices could take the support and subsequently test the resistances levels. In the medium term basis supports held at Rs 12600, 12000, 11600 and 11000; and resistances are Rs 13040, 13600, and 14000.

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