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During July 2014, the Pepper Price Index increased significantly by 44.11 points for black pepper and 26.69 points for white pepper from 270.72 and 244.16, respectively, in June 2014 to 314.83 and 270.85 in July 2014 (Table 1). The composite price of black pepper increased from USD 7,803 in June to USD 9,074 per Mt in July, recording 16.3% increase. The composite price of white pepper also increased by 10.9% from USD 10,406 in June to USD 11,544 per Mt in July, 2014 (Table2).

Table1. IPC Price Index in US$/Mt (Base Year: Average 2006 - 2010)

Note: The price index is calculated based on price developments during 2006-2010
Table 2: Composite Price of Black and White Pepper in US$/Mt

In general pepper market was very strong and active, whereas prices increased significantly to reach the ever highest in response to a clear situation of limited supply in the global market. Except in Vietnam, pepper production in all the other major producing countries decreased significantly during this year. From this year harvest, Vietnam has released more than 110,000Mt, leaving relatively smaller balance to meet the requests until next year harvest.

India recorded a higher price in July 2014 in view of strong internal demand and short supply from internal sources. At the last IPC session, it was estimated that production of pepper in India for 2014 would be around 45,000Mt, as against 58,000Mt reported for 2013. As per the available information, pepper production in India during this year would be much lower than the estimate earlier. The high price prevails within India has resulted a fall in the quantity exported. Even to meet request from the high end value added product manufacturers, India has imported a significant quantity of pepper mainly from Vietnam. In domestic market in India also traded imported pepper as it was cheaper than the local pepper. During the first half of 201, export of pepper from India was around 10,000 Mt.

Vietnam, the world-s largest producer and exporter, is reportedly to have exported around 111,400 Mt of pepper, including 100,800 Mt of black pepper and 10,600 Mt of white pepper during first half of 2014. This is the highest ever export figure for pepper achieved by Vietnam during all first six months. Compared to 82,500Mt exported during the same period last year, the export increased by 35%. Increase for Black pepper was by 42%, whereas for white pepper exports dropped by 10%.

Despite of the lowest price reported for Vietnam pepper, earning from pepper export during the first semester reached the value of US$ 797 million; a 48% increase over 2013. The most advantage for Vietnam is their huge production base and productivity across the world.

Entering the second semester, export of pepper from Vietnam is estimated to decrease, due to very tight stocks. Limited material is available at strong producers and traders who do not need urgent cash. Consequently the price will remain high until a significant increase in production takes place in other producing countries, such as in India or Indonesia at the end of the year.

In Indonesia, the market remained stable and calm with limited activities, in view of lower crop harvested this year. Ramadan festival in late July is also influence on that. Although Lampung, Bangka and Kalimantan of Indonesia has started harvesting and farmers need cash in anticipation of Lebaran festival, the price of pepper remained high increased to IDR 103,000 per Kg for black from IDR 94,000 per Kg in June end. White pepper price also increased from IDR 129,000 per Kg to IDR 140,000 at the end of July. The increase was due to continuous high demand both in local and international markets, coupled with the anticipation of lower output from current crop in Indonesia.

In the field surveys conducted by the IPC in early June 2014, it was observed that many pepper plantations in North Lampung was not bearing a good crop. Although pepper vines in East Lampung were relatively better, but number of pepper spikes sets seemed to be less. On an average only few spikes in every branch are appeared. Due to high labor cost and anticipating security, the pepper is harvested only one time. Hence, light berries from this year harvest were anticipated to be more.

Pepper production in Malaysia is reported to increase marginally this year. During 2013 export of pepper from Malaysia was 12,105 Mt. In line with the production increase, total export this year is also estimated to increase. During January - July 2014, a volume of 7,130 Mt of pepper is estimated to have been exported from Malaysia (5,679 Mt of black and 1,451 Mt of white pepper). Since harvest in Malaysia has completed, export in the following months is estimated to be more. Marginal increase in production expected this year is likely will not be much influencing market direction.

In Brazil, the harvest has begun. According to some sources, production of pepper in Brazil this year is estimated to be more or less same as last year harvest. In Sri Lanka production of pepper is reported to decrease significantly this year from 28,000Mt in 2013. This was due to unfavorable weather condition. Significant fall in production was also reflected by significant fall in export this year. Up to July 2014, export of pepper from Sri Lanka was around 5,040Mt, as against 9,200 Mt in the same period last year. In 2013, Sri Lanka achieved the highest ever pepper export figure from the country reaching 21,330Mt. This was attributed to the favorable weather conditions prevailed as well as better crop management such as shade regulation and long term productivity management practices adopted.

When consider the overall production and market situations, it is unlikely to expect any drop of pepper prices during the 2014 until significant development in production take place with favorable weather conditions crop management.

Black pepper prices prevailed in local markets and FOB prices are shown in table 3 and table 4, while for white pepper are 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