Monthly Publication

During June 2014, the Pepper Price Index increased by 9.48 points for black pepper and 1.57 points for white pepper (Table 1). The composite price of black pepper increased by 3.6% from USD 7,675 in May 2014 to USD 7,949 per MT in June, while that of white pepper increased marginally 0.7% from USD 10,241 per MT in May to USD 10,308 in June, 2014 (Table2).

Table 1. IPC Price Index (Base Year: Average 2006 - 2010)

Note: The price index is calculated based on price movements between 2006 and 2010
Table 2: Composite Price of Black and White Pepper (US$/MT)

Pepper market continued to show a strong trend in June 2014. Pepper prices have experienced a continuous increase during the last three months. A sharp increase has taken place in India. The price recorded in June was the highest achieved so far. The high prevailing price has confirmed that demand is increasing and in other side supply of pepper in producing countries remained limited.

In India, Malabar black increased sharply in the last three month from INR 510 (USD 8.4) per kg in March 2014 to the level of INR 715 (USD 12.2) per kg in May. Entering June the price decreased gradually, but in the late June the price rebound to INR 716 (USD 11.9). Although the average price was 4% lower from average price in May, the price remained the top among the others. Such high prevailing price occurred in India was due to strong internal demand. In other side limited supply from internal source as well as from other producing countries such as Sri Lanka and Indonesia, the main source for India, has contributed to this situation.

In Vietnam the market was more dynamic, supported by available supply from last year-s carry over and new material from current crop. Local price in Ho Chi Minh City increased from VND 145,700 and VND 197,500 per kg, respectively, for black and white pepper to the level of VND 163,100 per kg for black and VND 214,500 for white. In dollar terms, average price of pepper at domestic market increased by 5% for black and 3% for white pepper. While for fob price it was relatively stable.

Although the harvest taken place in early this year was reportedly higher, there was no selling pressure reported in Vietnam. The high overseas demand and limited supply from producing countries has pushed the price to the higher level. Vietnam has taken this good opportunity to realize maximum earning from pepper by releasing major share of pepper harvested this year. Up to June 2014 Vietnam is estimated to have exported around 111,000 Mt of pepper valued at around USD 798 million. As against the export of 82,445 Mt valued at USD 540.3 million, an increase of 35% in quantity and 48% in value were recorded. In 2013, total export of pepper from Vietnam was 134,442 Mt valued at USD 898.8 million

In Lampung, the price of black pepper increased further. In June the price was IDR 94,000 (USD 7.8) per kg, increased from IDR 85,000 in May. In dollar terms, average price of Lampung black increased by 1%, while fob price increased by 3%. During June trading was quiet, due to very tight stock available at farms. New material is expected to arrive in the market only by August. It is estimated the output from this year harvest would be lower than the last year and also lower than estimated earlier. Significant decrease is anticipated in North Lampung, mainly due to pest and disease infestation. Prolonged wet weather at most of the growing areas in Lampung has exacerbated the vegetative growth of pepper output this year. Pepper vines look healthy, but less spike formation. Under this situation there is no reason to bring the price down.

In Bangka, price of the white pepper followed black. In June the price increased to IDR 129,000 per kg from IDR 120,000 in May. The price recorded in June was also the highest received so far. White pepper exported from Indonesia was mainly from Bangka. Initial harvest in Bangka has begun and the peak is expected in August. Out put of white pepper in Bangka is estimated to be slightly better. Kalimantan and Sulawesi also mostly produce white pepper. Major share of white pepper from these areas are traded locally for domestic consumption. The balance is exported through Surabaya and Jakarta. Due to limited stock carried from last year and lower harvest anticipated this year, particularly black pepper, export of pepper from Indonesia is estimated to be lower than the last year. In 2013, Indonesia exported 47,910 Mt comprising of 31,350 Mt of black and 16,560 Mt of white pepper.

In Sarawak, Malaysia, pepper prices were relatively stable during May - June at MYR 20.8 and MYR 30.8 per kg for black and white, respectively. A marginal increase of around MYR 1 per kg has taken place at the forth week of the month. On an average the price increased by 1% in June.

In the last IPC Session, it was reported that production of pepper in Malaysia is estimated to increase marginally. The situation was reflected by the export performance achieved during the year. During January - June, 2014, Malaysia is estimated to have exported around 5,000 Mt (3,700 Mt of black and 1,300 Mt of white pepper). This quantity was more or less same as exports in the same period last year. In 2013, export of pepper from Malaysia was 12,110 Mt (9,920 Mt of black and 2,190 Mt of white)

In the first half of June, pepper price at growing areas in Sri Lanka was stable at the level of LKR 986 per kg. Entering the second half of the month the price increased gradually to close at LKR 1,081 at the end of the month. In Dollar terms, average price of pepper in Sri Lanka increased by 1% in June.

It is reported, production of pepper in Sri Lanka would be lower this year due to unfavorable weather conditions prevailed during the latter part of 2013, which affected on flowering. This was reflected by the export performance achieved in the last few months. During January - March, export of pepper from Sri Lanka was 1,582 Mt decreased by 40% from 2,623 Mt in the same period last year. It was reported that export in April - June remain small and a volume of 3,000 Mt is estimated to have been shipped from Sri Lanka during January - June. Compared to export of 6,560 Mt in January - June 2013, total export in the first half of the year decreased substantially. In 2013, total export of pepper from Sri Lanka was 21,328 Mt valued at USD 127.6 million

In Brazil pepper price stood at the level of BRL 17 per kg locally during April - May 2014. In June the price increased marginally to BRL 17.5 per kg. In dollar terms average local price of Brazilian black increased by 2%. Fob price of Brazilian black (ASTA) increased from USD 8,200 per Mt at the beginning of June to USD 8,700 at the month-s close.

It was reported that new harvest in Espirito Santo, Brazil has begun. In some area of Para State an initial harvest has also started. However, due to FIFA world cup festivities, trading was running very slow. Production of pepper in Brazil this year is estimated to be not encouraging. Export achieved up to June was 12,818 Mt valued at USD 97 million, registering a decrease of 9% in quantity, but increase in value by 9%. In 2013 total export of pepper from Brazil was 30,571 Mt worth USD 200.4 million.

Looking at the situation, consumption and inventory requirements, the amount of pepper production is not rising at the same rate of demand; hence there is no fundamental reason for price fall and the price is expected to remain high this year until significant change in production takes place in 2015.

Black pepper prices prevailed in local markets are shown in Table 3 and FOB prices in Table 4 and for white pepper are shown in in table 5 and 6 below.

Table 3: Local Price of Black Pepper in USD per MT

Table 4: FOB Prices of Black Pepper in USD per MT

Table 5: Local Prices of White Pepper in USD per MT

Table 6: FOB Price of White Pepper in USD per MT