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Owing to strong demand, prices of pepper staying firm: Geojit Comtrade
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Wednesday, 23 April, 2014, 08 : 00 AM [IST]
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Nandita Vijay, Bengaluru
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fiogf49gjkf0d The prices of pepper are staying firm with a bullish outlook, due to the strong demand for it amid the lower production forecast. However, weak export export orders in the midst of the ongoing harvest in Vietnam may limit sharp gains in the domestic prices in the short run.
This was stated by Geojit Comtrade Ltd, a Kochi-based brokerage firm dealing in commodity futures. It is a member of the three major commodity exchanges - Multi-Commodity Exchange (MCX); the National Commodity and Derivatives Exchange (NCDEX), and the National Multi-Commodity Exchange (NMCE).
Besides its currencies in Mumbai, the latter has a centralised institutional desk, catering to corporates and high net-worth individuals (HNI) pan-India. It is one of the leaders in a number of commodities, including spices and edible oils. It stated that it was neutral on prices and did not have proprietary interest in any commodity.
As per the International Pepper Community (IPC), India’s pepper output during the year was estimated to be 35,000 tonne, while the global output was estimated to be around 3,33,500 tonne. India’s consumption of the price was estimated to be about 45,000 tonne, while the global production was anticipated to be about 3,87,000 tonne.
“Looking ahead, the prices are likely to stay firm, probably in the Rs 550-620 region. However, strong gains beyond Rs 650 per kg are least anticipated, as high domestic prices are likely to attract more import, which may curb sharp rallies in prices,” C P Krishnan, whole-time director, Geojit Comtrade Ltd, said.
“The prime reason behind the spike in prices is the expectation of lower production. Due to severe monsoon last year, the crop output was severely affected due to rain-inflicted damages. The major producing states, Kerala and Karnataka, have reported lower production during the year,” he added.
On the factors one should look into before investing in pepper, Krishnan said that both production and consumption in the domestic and overseas markets, along with currency moves, charges like shipment cost, duty and other levies, could influence the price movements.
As per the Spices Board records, until December 2013, India exported 571,680 tonne spices (including pepper) worth Rs 9,433 crore. Krishnan said, “However, the export forecast for the fiscal 2014-15 indicates that Indian pepper exports are likely to be on the weaker side due to higher prices, tight supply conditions and quality related issues.”
On the challenges in the production of pepper, Geojit Comtrade’s chief stated that pepper cultivation required a warm and humid climate, along with appropriate rainfall.
To flush and flower, the crop needs adequate rain in suitable intervals. A dry spell, even for a few days, during the flushing and flowering period would result in an extensive decline in output. It needs an optimum temperature of 20-30 degree Centigrade, and porous, light and well-drained soil rich in organic matter.
The selection of the site, the selection of mother plants, planting, water management, nutrient management, weed, pest and disease management are equally critical for a good yield. Proper harvesting and processing of the crop is also essential for superior quality.
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