Date:19/05/2008 URL: http://www.thehindubusinessline.com/2008/05/19/stories/2008051950450700.htm

Back Depreciating rupee to help pepper continue its bull run

On the back of good export demand

Pepper

Suresh P. Iyengar

Mumbai, May 18 The depreciating rupee against US dollar will help pepper continue its bull run on the back of buoyant export demand.

Rupee has depreciated from Rs 39.60 to a 13-month low of Rs 42.67. Moreover, supply in the domestic markets is shrinking. Inventory at the NCDEX warehouses were 6,591 tonnes.

According to the International Pepper Committee (IPC) data production in Vietnam, the world’s largest producer and exporter, is expected to drop by 10 per cent to 90,000 tonnes, with exportable-quantity accounting for about 83,000 tonnes.

Selling pressure

“Farmers in Vietnam shifted to other crops such as coffee and rubber as poor pepper crop management lead to disease outbreak, thus hindering production prospect,” said an analyst. Vietnam Pepper prices fell from $3,800 a tonne in March to $3,000 in May, due to increased selling pressure coupled with sluggish demand.

In Brazil, the third largest producer after Vietnam and India, the output for 2007-08 is projected at 35,000 tonnes and an exportable quantity of around 33,000 tonnes. Planters are holding back their stocks as they expect drastic fall in the global production, amidst good demand will push up prices further in the coming months.

Unseasonal rain in pepper growing areas of Indonesia has affected the quality of the crop. Production in Indonesia has seen drastic fall in last couple of years from about 65,000 tonnes in 2003 to 25,000 tonnes in 2007 and expected to fall further next year too. In Malaysia, the production in 2007-08 is projected at 20,000 tonnes, while 19,000 tonnes is expected to be available for exports.

Global production

India ranks second in global pepper production, contributing about 19 per cent of the total output. India boasts of celebrated varieties ‘Malabar Garbled’ and ‘Tellicherry extra bold’.

In 2007-08, India’s production has been forecast at 50,000 tonnes against 55,000 tonnes produced last year. Global production is on the slide from 3.55-lakh tonnes in 2003 to 2.71 lakh tonnes in the current year, because of crop infection due to poor management. Prices are expected to touch Rs 16,000-17,000 a tonne in July and August.