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In 2016, pepper market experienced a declining trend; although the price still relatively good when compared with prices prevailed in the previous 5-10 years. In 2016, average pepper price decreased by 11% and 9% for black and white pepper respectively from the peak achieved in 2015. Average composite price of black pepper decreased to US$ 8,280 per Mt from US$ 9,265 per Mt in 2015 and for white pepper decreased from US$13,290 per Mt in 2015 to US$12,095 per Mt in 2016. Significant increase in production and export from Vietnam was the main factor for the decrease; although production and export from other producing countries decreased.

During 2016 pepper price index decreased significantly by 28.6 points for black and 25.9 points for white pepper. In December 2016, however, the index has shown an increase by 3.2 points for black and 3.5 points for white pepper. On an average, the price index in 2016 decreased by 11% and 9% respectively for black and white pepper from the average price index in 2015.

Correspondingly, the composite price of black pepper decreased to US$ 7,353 per Mt in December 2016, from US$ 9,479 per Mt in December 2015.The composite price of white pepper in December 2016 was US$ 10,582 per Mt, decreased from USD 13,265 per Mt in December 2015. Composite price in December 2016 has increased from US$ 7,112 per Mt for black and US$ 10,217 per Mt for white pepper recorded in November which was the lowest during the year 2016.

The IPC price index and composite price of black and white pepper are shown in Table 1 and 2 respectively.

Table 1
IPC Price Index
Base Year : Average 2011 - 2015)

Table 2
Nominal Composite Price of Black and White Pepper (US$/Mt)

Note: Composite prices are derived from monthly export and FOB price of the top five pepper producing countries (Vietnam, Brazil, India, Indonesia and Malaysia)

In December 2016, the market has shown a mixed response, with limited activity, particularly in the second half the month, as buyers seems to have fulfilled their inventory in anticipation of year end long holiday. In India, Vietnam, and Indonesia, average price of pepper has increased; while in Malaysia and Sri Lanka it has decreased. White pepper in China was relatively stable. The reason of the increase was likely due to supply from main source, like Vietnam has been shrinking in December; while pepper harvest in India is reported delay and new material is only expected to arrive in the market by January 2017.

In view of average price during 2016, except India and Sri Lanka, the pepper price has decreased. Significant decreases were recorded in Vietnam, by 18% for black and 28% for white pepper locally. FOB price of pepper in Vietnam decreased by 12% for black and 10% for white pepper. Indonesia also recorded a significant decrease by 12% locally and for FOB price decreased by 9% for black and 12% for white pepper. In Malaysia, local price decreased by 12% for black and 7% for white pepper. FOB price of Sarawak pepper decreased by 10% for black and marginally 1% for white pepper. In China, average price decreased by 16%; while in India and Sri Lanka increased by 4% and 6% respectively.

Table 3.
FOB Price of black pepper (US$/Mt)

Table 4.
FOB price of White Pepper in US$/Mt

In New York, spot price of black and white pepper decreased to the level of US$ 7,985 and US$ 11,690 per Mt respectively in December 2016 from the highest of US$ 11,333 and US$ 16,496 per Mtfor black and white pepper respectively achieved in the month of July 2015. The following chart as below illustrates the position.

Production and Export of Pepper
During the 44th IPC Session held in Jakarta, Indonesia, between 8th and 11th August 2016 world pepper market scenario for the years from 2015 to 2016 was reviewed based on the provisional figures reported by producing countries. It was concluded that production and export of pepper in 2016 is estimated to be around 397,200 Mt and 290,600 Mt respectively, recording a decrease of 5% and 4% compared with production and export achieved in 2015 at the level of 416,200 Mt and 301,800 Mt respectively.

Based on latest information and current development received from trade and official sources as well as assessment made by IPC it is estimated that global production of pepper in 2016 would be around 415,200 Mt, which is more or less same as previous year with a marginal decrease when compared with production achieved in the previous year (2015). Black pepper production decreased by 5,200 Mt, but 4,200 Mt increased for white pepper. Except in Vietnam and Cambodia, production of pepper in most producing countries had decreased. Vietnam has successfully strengthened his position as the largest production and export, captured 41% of world production and seized nearly 60% of world export in 2016.

Export of pepper from producing countries in 2016, excluding the raw materials used for manufacturing pepper oil and oleoresin for export, is estimated around 299,100 Mt (254,800 Mt of black and 44,300 Mt of white pepper). Total export in 2016 recorded a marginal decrease of 1% when compared to export of 301,900 Mt in 2015, mainly due to significant decrease of exports from Indonesia and India. Significant increase of export from Vietnam was likely not enough to compensate the decrease of other countries.

Table 5.
Production and export of Pepper, 2015 and 2016 in Mt

Note: Production & Export figures for 2016 is provisional subject to revision

2016 - Year of blessing for Vietnam
During 2016, Vietnam is estimated to harvest 170,000 Mt of pepper, increased from 122,000 Mt in 2015. Along with pepper imported from neighboring countries, like Cambodia and Indonesia, Vietnam is estimated to have exported minimum 175,000 Mt in 2016, an increase of 31% from 133,646 Mt in 2015. During 2016 Vietnam held nearly 60% of global pepper market, followed by Indonesia, Brazil, India and Malaysia at much lower levels.

Although pepper prices went down in 2016, Vietnam continued to enjoy excellent benefit from pepper industry, even better than previous year.Vietnamese earnings from pepper in 2016 increased by 10% from US$ 1.3 billion in 2015 to US$ 1.4 billion in 2016. Other producing countries experienced a significant decrease in earnings from pepper exports. Price down couple with decrease in the volume of export has resulted in significant decrease in the earnings. Export earnings from pepper for India and Indonesia were only US$ 136 million and US$ 372 million in 2016, recording a decrease of 50% and 32% respectively from earnings in 2015. Export earnings from pepper for Brazil, Malaysia and Sri Lanka also decreased by 30% 12% and 43% respectively.

The following table and chart illustrates the relevant details.

Table 6.
Export of Pepper in quantity and value in 2015 and 2016