Monthly Publication

In September 2016 the market was relatively quiet with limited activity. More active trading was taking place only in Vietnam following good harvest resulted during the year. Except in India and Sri Lanka, pepper prices decreased during the month under review.

Pepper price index has shown a declining trend. Price index of black pepper decreased by 5.18 points and decreased by 4.82 points for white pepper. (Table 1). The composite price of black pepper decreased by 4.6% to US$ 7,935 per Mt from US$ 8,320 in August 2016 and composite price of white pepper also decreased by 4.3% from US$ 11,622 per Mt in August 2016 to US$ 11,122 in September 2016. Although pepper price in India increased, the composite price in September 2016 recorded the lowest in 2016 (Table 2). Decreasing price during the situation of lower production reflected demand for pepper from the importing countries lower this year.

Table 1.
IPC Price Index (Base price: Average 2011 - 2015)

Table 2:
Composite Price of Black and White Pepper (US$/MT)

The 44th Session of IPC has over in August 2016. Country report from producing countries has been presented and discussed in detail and concluded that production of pepper in 2016 would be lower by 5% to 397,000 Mt from 416,000 Mt resulted in 2015. The decrease was due a significant decrease taking place in India, Sri Lanka and Indonesia, particularly black pepper in Lampung. Only Vietnam reported production increase this year; while production in other countries was relatively stable.

In September 2016 the market showed a discouraging response. Except in India and Sri Lanka, pepper price at other sources decreased. Trading was also reported limited.

In India local price of black pepper remained stable and stood at the level of around INR 690 (US$ 10.35) per Kg during the last few months. This was the highest level when compared to price prevailed in other producing countries. Even, when compared with the average prices prevailed at the beginning of the year, the price was higher by 11%. High prevailing price level was also recorded in Sri Lanka. In September local price of pepper in Sri Lanka increased marginally by 1% and when compared with the average price in January 2016 the price increased by 3%.

It is understood that pepper price persistence at high level in these two origins was due to significantly lower production resulted this year, besides local demand for industrial uses in these two countries is also high. As reported earlier, production of pepper in India decreased significantly this year to 48,500 Mt from 70,000 Mt harvested last year. In Sri Lanka the production decreased to 19,000 Mt this year from 28,000 Mt last year.

The production decrease in India has been confirmed by the drastic fall in export performance achieved this year. According to statistics published by ITC, during January - July 2016 India only exported 13,800 Mt as against 23,000 Mt in the same period last year, registering a significant decrease of 40%. Spices Board, India reported that India exported 28,520 Mt of pepper in 2015, excluding black pepper equivalent for pepper oil and oleoresin exported from India.

In Vietnam pepper prices decreased between 5-7% both for black and white pepper in local market as well as at export market (FOB price). It is clearly noticed, that the decrease in prices was attributed by the fact that production of pepper in Vietnam increased significantly this year. The increased production this year was reflected in the export performance achieved this year. During January-August 2016 Vietnam has exported 136,000 Mt of pepper, recording an increase of 30% when compared to export volume of 105,000 Mt in the same period last year. It is estimated, an export volume of 150,000 Mt targeted for 2016 would be achieved.

Anomaly phenomenon is likely taking place in Indonesia. Whereby, at the time of production decrease this year, price also fell down significantly. In the last 44th IPC Session it was reported that production of pepper in Indonesia is estimated to decrease by 13% from 80,000 Mt in 2015 to 70,000 Mt in 2016, whereas production of black pepper decreased by 10,000 Mt from 49,000 Mt to 39,000 Mt this year. A short survey to confirm the decrease in Lampung and Bangka was done. Farmers in Lampung even reported that the decrease was more than estimated earlier. In Bangka the output of this year harvest was relatively better when compared to the situation in Lampung. However, prices at these two main producing centers in Indonesia were not encouraging. Average farm-gate price during September 2016 decreased by 10% for black in Lampung and decreased by 4% for white pepper in Bangka, when compared to average price in August 2016. It was reported that the decrease was due to less overseas demand.

The low demand of black pepper this year is reflected by the low export performance achieved during the year, During January-August export of black pepper from Lampung was only 11,000 Mt. as against 23,000 Mt of black pepper export in the same period last year.

In Sarawak, local price of black pepper decreased by 4% during the month under review. A significant decrease was recorded for local price of white pepper by 14%. FOB price of black pepper decreased marginally by 1%, while for white pepper decreased by 7%. In the last IPC Session, it was reported that production and export of pepper by Sarawak is estimated to be slightly better. However, up to August 2016 pepper export from Malaysia was only 7,100 Mt, recording a decrease by 26% from 9,500 Mt in the same period last year. Price decrease coupled with lower export is reflecting the demand for pepper is less this year.

Overall the market of pepper is likely not encouraging during the month under review. Price decreased with limited activities following less demand from consuming countries was recorded. Buyers apparently still refrain from buying expecting to get lower price which is anticipated to take place in 2017. Pepper market in the coming year however will depend on the situation of crop development in 2017, mainly in Vietnam, India and Indonesia. In the last IPC Session it was reported that pepper production for 2017 is projected to increased by5%, mainly in Sri Lanka and India. Production of Indonesia is also projected increase at relatively lower level. Since internal demand of these two countries (India and Sri Lanka) is considered to be high, effect of the production increase may not be significant.

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

Table 3: Local Price of Black Pepper in US$ per MT

Table 4: FOB Prices of Black Pepper in US$ per MT

Table 5: Local Prices of White Pepper in US$ per MT

Table 6: FOB Price of White Pepper in US$ per MT