India Pepper market cornered; trend positive in futures

Last Updated : 10 October 2012 at 09:30 IST

KOCHI (Commodity Online): If information from traders is anything to go by, the Indian pepper markets have been cornered by a single party. As on Monday “the said party owns 80-85% of stocks in the NCDEX warehouse.” a trader had said.

Meanwhile, Kochi witnessed sales at the rate of Rs.410-415/Kg for 100 tons in pepper (ungarbled) on Tuesday. No sales occurred in garbled variety as per traders. “The trend cannot be predicted as markets have been cornered by a group.” a trader said.

Kochi spot markets witnessed no sales for pepper on Monday. There were sellers for ungarbled pepper at the rate of 411/Kg for about 40 tons. But the buyers insisted on Rs.408-409/Kg. In effect the sales did not materialise.

Tuesday futures

NCDEX pepper November futures opened Tuesday at Rs. 43150, touched a low of Rs.42940, a high of Rs.43650 and closed at Rs.43285.

Dematted stock as on October 8 2012; Monday is 3750 tons in NCDEX and quantity in process for the same day is 363 tons.

Pepper traded with a positive momentum in the intraday session on futures. Major support and resistance are at Rs.42900 and Rs.43800 respectively. “It may trade with a positive sentiment unless it breaks the support at Rs. 42900” our in-house analysts said.

Global trends

Reports suggest that Vietnam farmers are neither willing to sell pepper at lower price nor wanting to compete with other origins until their new crop comes by early next year.Brazil crop is also expected to be lower and exporters will not sign contracts in anticipation of the crop as they did it last season. Hence there will not be adequate supply of pepper for the period from September to December from these origins.

Meanwhile, market was stronger and prices increased at all origins. In Lampung and Belem as well as Brazil the market was active and price of black pepper at these sources rose by 5-6% locally this week.

As published in: http://www.commodityonline.com/news/india-pepper-market-cornered;-trend-positive-in-futures-50788-3-50789.html

Madagascar Pepper variety still a distant dream for India

Last Updated : 17 September 2012 at 14:05 IST

By Radhakrishna Bhat N.S. & Rakesh Neelakandan
India may have to wait some more time before Madagascar pepper variety could be cultivated here.

“It requires authorisation from concerned authorities, said Dr.A.Jayathilak, IAS, Chairman of Spices Board India to Commodity Online. “We need sufficient approvals before we can bring a foreign variety to India.”

He was speaking at the sidelines of a session organised by “Collaborative Training Centre”, a joint initiative by Spices Board, Confederation of Indian Industries-FACE, and USFDA-JIFSAN (The Joint Institute for Food Safety and Applied Nutrition/USFDA or US Food and Drug Administration).

He said that Africa is an emerging destination for spices from India. “Spices Board is taking part in trade-fares in various parts in Africa.” he added. “Markets in US, EU have already saturated.”

He also said that contamination by virtue of Aflatoxin and Sudan Dye have become things of past.

Replanting efforts in pepper in Kerala is yet to bear fruits and according to Jayathilak is “too early to be commented.”

India, being the third largest producer of black pepper in the world, witnessed fall in its production in recent years due to various domestic factors like old and less yielding varieties, fall in the total area of cultivation and others. The average productivity of Indian pepper had fallen drastically from above 300 kg per ha to 260 hectare.

However, Madagascar black pepper variety can yield four times more than our Indian black pepper - say experts.

On the other hand, Indian pepper farmers fear that import of such high yielding pepper varieties may end the scope of pepper due to fall in the prices. Farmers also say that imported Madagascar varieties can't give the quality of India's own domestic pepper.

Collaborative Training CentreThe Collaborative Training Centre for Food Safety and Supply Chain Management in spices/botanical ingredients the first of its kind in India is being set up to facilitate capacity building and developing product specific testing procedures in the said sector.

Spices Board and CII-FACE along with JIFSAN has established the centre and seeks to bring about harmonisation of standards across board.

The first phase of the training commenced in Cochin on Monday and was attended by over 60 officials and delegates from about 50 organisations representing both the government and NGO sectors, comprising of processors, traders and exporters.

A MoU or Memorandum of Understanding was signed on the occasion by Dr.A.Jayathilak, Sujith Haridas, Regional Head, South CII, Dr. Indrani Ghose, Principal Counsellor, CII and James Wayne Rushing, Manager, International Training Program JIFSAN.

The second phase of the project, a two-week training session for selected delegates will be held in USA. In the third phase, participants attending phase II would be involved in a series of workshops and training programs in different regions of India.

The center would also strengthen the supply chain management of spices and botanical ingredients for both domestic and international trade.

It will provide technical support to organisations through training, creating information sharing platforms and providing technical consultancy to organisations selected by the board, in the upgradation of their manufacturing, processing facilities, quality control assurance system, implementing hygiene and food safety management system.

As published in: http://www.commodityonline.com/news/madagascar-pepper-variety-still-a-distant-dream-for-india-50390-3-50391.html

Why Indian pepper is trading cheap in international markets

Last Updated : 15 October 2011 at 13:55 IST
KOCHI (Commodity Online): In fact it is a rare occurrence; Indian Pepper varieties usually trade at a premium to pepper varieties from other nations. Suddenly this has changed.

Currently, Indian parity in the international market is quoted to be the cheapest at $8,050-8,100/tonne (c&f) for Europe & $8,300/tonne (c&f) for US is enabling the exporters to bag firm pepper export orders, says a report from SMC global.

So what could be the reason?

“In Vietnam, for instance, regulations are on which prevent importing and re-exporting of pepper. Now, the traders there are only allowed to export value-added pepper. This means they are unable to import pepper from India and simply re-export the same unless they process it and make it into a value-added product.” said Gulshan John, head of Harmony Spices based out of Kerala.

“Given the tightness in domestic supply situation, Vietnamese are unable to export pepper at low prices, which they used to do.” he added.

Domestic exporters there have to pay more for pepper because of the evident supply crunch in pepper in Vietnam.

As per recent media reports, Vietnam is not even quoting the price for Asta grade as the availability is down to trickles. (Vietnamese pepper, last week maintained $7,220/MT even as Indian prices were quoted at $6721/MT; Ex-Kochi)

“The stocks there in Vietnam have already been sold.” he said.

This has prevented Vietnam from selling Pepper cheap.

“Further, with pepper prices climbing in the Indian futures market, traders who insisted on delivery of pepper found it cheaper to source pepper from the spot.” Gulshan pointed out.

With spot demand picking up, traders opened up their inventories.

Speculation
In months, pepper in the futures market on NCDEX climbed by hundred rupees.

“This is mainly due to speculation...” he said.

But the prices do not climb beyond a point, as investors seek to remain risk averse.

“Nobody would dare to take a position at Rs.370 levels.” he said. “And as a result, stiff resistance was experienced at that price point..”

All together, the prices in spot appreciated by modest margins even as the futures maintained their levels on speculation.

This ultimately resulted in cheaper Indian pepper prices as exporters bought from spot.

Speaking of a development, Gulshan John commented that a shift in startegy on the part of exporters and importers is visible.

“These days, the time-frame for contracts have come down. Exporters are not committing to prices beyond, say three months due to uncertainty in the global markets.”he said.

As published in: http://www.commodityonline.com/news/Why-Indian-pepper-is-trading-cheap-in-international-markets-43020-3-1.html

‘SMX proposed black pepper futures contract may become global benchmark’

Last Updated : 01 July 2011 at 10:50 IST
SINGAPORE (Commodity Online): In a bid to cash-in on the boom in agri-sector, the Singapore Mercantile Exchange is planning to come up with contracts in black Pepper futures in the third quarter this year.

The contract idea was originally proposed in September 2010 and was possibly undergoing “exhaustive research and close consultation with key industry players” as its then CEO, Thomas J. McMahon had commented.SMX is backed by Financial Technologies (India) Limited which has successfully established 10 exchanges across India (MCX), Dubai, Singapore, Africa, Mauritius and Bahrain.

In a response to Commodity Online, SMX informed of the reasons behind the launching of the contract, how it is planning to bring liquidity and why the contract is expected to become a global benchmark.

1. What reasons have prompted SMX to come up with a contract in black pepper?

Black Pepper is a high value commodity. All the entities involved in its global supply and value chain are exposed to high price volatility due to seasonal, climatic and supply - demand factors. Today there is no global Black Pepper futures contract available which can be used by these international entities to mitigate their price risk (except domestic black pepper futures available to Indian players only). Nor there is any global price discovery platform of black pepper which can give directional inputs to the global physical market players.

The proximity of SMX in Singapore to the major producing regions of black pepper i.e. Vietnam, Indonesia, India and Malaysia encouraged the Exchange to look at this commodity for developing a Asia centric price discovery and price risk management futures platform. Also several major global black pepper physical traders have a strong presence in Singapore, which makes Singapore the ideal location for a black pepper futures contract.

2. How does SMX plans to bring liquidity into the contract?

SMX has planned out extensive awareness and educational programs in the major black Pepper producing and trading centers to attract the key industry players to hedge on its platform. The high price volatility of the commodity is expected to attract the interest of the directional traders, commercial trading firms and arbitrageurs.

The novation of each futures contract executed on the Exchange by the SMX-CC in Singapore, would give the market participants added confidence of effective mitigation of settlement and counter party risk. The state of the art trading system of the Exchange and the robust clearing, settlement and delivery mechanism under the apt regulatory oversight of the Monitory Authority of Singapore (MAS) is expected to attract participation from across the global, especially from the major importing centers viz. US, EU and Middle East.

3. Does SMX think that the contract will become a global benchmark? Why?

SMX Black Pepper contract is well poised to become a global benchmark as the Asia Pacific region is the largest underlying market of black pepper in the world, both in terms of production and exports. The contract is expected to attract a wide spectrum of black pepper trading firms across the globe as it would offer them a unique avenue for off-loading their price risk. In the absence of any global benchmark for black pepper prices, the SMX contract would be gradually used as a price barometer by the global physical players for their commercial transaction, which in turn would make it a global benchmark.

India market players positive

Analysts and industry participants in India seem to welcome the SMX move, according to certain media reports. India is a major producer of pepper and NCDEX (National Commodity& Derivatives Exchange) and NMCE (National Multi Commodity Exchange) currently provides for a platform for trade in pepper futures in India.

As published in: http://www.commodityonline.com/news/%E2%80%98SMX-proposed-black-pepper-futures-contract-may-become-global-benchmark-40434-3-1.html