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As reported earlier, pepper market has experienced a declining trend in 2016, where price of pepper prevailed in 2016 was averagely lower when compared with the average price in 2015. Global production in 2016 is estimated to have relatively stable; while for export a slight increase was recorded. Carry over stock for 2017 is around 68,000 Mt, a marginal increase of 1,000 Mt from 67,000 Mt at the beginning of 2016. Considering the above situation, pepper market in 2017 will depend largely on developments in production during the year. In the short term, the market may be affected by the situation of harvesting season in India and Viet Nam. The largest producing and exporting country, Viet Nam will play important role in determining market direction.

Revised estimate figures on production, export and stock carry over in 2015 and 2016 is given below.

Table 1:
Production, Export and Carry-over Stock in 2015-2016 (Quantity in MT)

During January 2017, the market has slowed down. Pepper price index decreased by 4.2 and 3.6 points respectively for black and white pepper (Table 2). The composite price of black pepper decreased by 4.3% to US$ 6,932 per Mt from US$ 7,244 per Mt in December 2016, while that of white pepper decreased by 3.5% from US$ 10,547 per Mt in December 2016 to US$ 10,175 in January 2017 (Table 3). The decrease of the composite price index was mainly due to significant decrease of price prevailed in Viet Nam, the largest supplier. Pepper price in India also decreased; while prices at other origins were relatively stable during January 2017.

Table 2
IPC Price Index (Base Year: Average 2011 - 2015)

Table 3:
Composite Price of Black and White Pepper (US$/MT)

During January 2017, the market has shown a decreasing trend, in response to the arrivals of new material from current harvest in India and harvesting season in Viet Nam which is about to begin soon. Pepper price in India, Viet Nam and Sri Lanka decreased while in other producing countries were relatively stable.

As reported in the last 44th Session of IPC, held in Jakarta, production of pepper in India is estimated to be around 55,000 in 2017 as against 48,500 Mt in 2016. Harvesting season in India this year is experiencing a little bit delay and picking is expected to continue until April 2017. Although the production increased this year, considering strong support of internal demand, more portion of the increase will be absorbed internally, mainly for industrial uses. Pepper price prevailed in Kochi during January 2017 was INR 650 per kg locally and US$ 9,823 per Mt FOB, a marginal decrease of 3% when compared to average price in December 2016. In Sri Lanka, the price also decreased from LKR 1,100 per Kg locally at the beginning of the month to LKR 1,060 per Kg at the monthÔÇÖs close. On an average, local price in Sri Lanka during January decreased by 9% from average price in December 2016. Reported good harvest this year is one factor influencing price decrease.

Viet Nam, the largest pepper producers and exporters has an important role in determining market direction. As per latest information, this year production of pepper in Viet Nam is estimated to be more or less same as achieved last year, at around 175,000 Mt with a volume of 180,000 Mt of pepper is expected to be shipped from Viet Nam in 2017. In 2016, Viet Nam has realized his ambition to increase pepper exports by releasing a huge volume of pepper at the level of 178,400 Mt valued at US$ 1.43 billion, a substantial increase of 33% in quantity and 12% in value from his export performance of 133,600 Mt worth US$ 1.28 billion in 2015. Total export of pepper from Viet Nam occupied 59% of global pepper market in 2016.

Share of Viet Nam to the world production and export of pepper is shown in the following charts.

In January 2017, the market in Viet Nam is still calm. The local prices of pepper in Ho Chi Minh City, Viet Nam were VND 128,500 and VND 177,500 per Kg for black and white pepper respectively at the end of the month, decreased from VND 137,100 and VND 185,500 per Kg respectively for black and white pepper at the beginning of the month. On an average the local price of pepper in January 2017 decreased by 5% and 3% respectively from average price in December 2016. In the case of FOB price, the price decreased by 8% both black and white pepper.

In Lampung, Indonesia the market was still quiet as no catch crop in Lampung reported this year. Activity is expected to begin when pepper harvest stared some-time in July. Although prices were relatively stable; since tight stock available at farmers, almost no activity throughout the month was reported in local market.

According to information received from farmers, fruit setting of pepper for this year crop season in most pepper gardens in Indonesia is reported to be not promised. Prolonged wet weather with high intensity of rainfall during the last few months in main producing areas was not favorable for flowering. Productivity of pepper per vine would be much lower when compared to last year crop season. However, observing many young pepper plants, as a result of replanting and rejuvenation of pepper garden begin to produce, the decline in overall production this year may be minimal.

From Bangka also reported that as a result of erratic rainfall occurred in the second part of last year, there will be a catch crop which is expected to be harvested in April 2017. Market activity in this source is also limited and prices were relatively stable during the month.

In Sarawak, Malaysia, production of pepper is also estimated to be more or less same as last year at the level of 23,000 Mt and the harvest is expected to begin in May. In the last IPC Session held in August 2016, Malaysia has targeted to export 15,500 Mt of pepper in 2016. Up to December 2016 however, export realization of pepper from Malaysia was only totaled at around 12,200 Mt, a decrease of around 10% from 13,624 Mt in 2015 and lower from targeted earlier. During January 2017, only Sarawak pepper recorded a price increase in local market from MYR 18.5 and MYR 30 per Kg respectively for black and white pepper at the beginning of the month to MYR 21 and MYR 31 per Kg at the monthÔÇÖs close. On an average, local price of Sarawak pepper increased by 8% for black and 6% for white pepper. In the case of FOB price however, the price was reported stable at the level of US$ 7,780 and US$ 10,860 per Mt respectively for black and white pepper.

Provisional estimate of Brazilian pepper production in 2016 was reported at the level of 45,500 Mt. Along with carry-over material from last year harvest, a volume of 39,000 Mt is expected to be exported in 2016. Real output from 2016 crop season however, was not as good as estimated earlier. This was reflected by the export performance achieved during 2016 at the level of 31,100 Mt, recording 18% lower from export quantity achieved in 2015. Export of pepper in the fourth quarter 2016 was also significantly lower when compared to export in the fourth quarter of 2015, as shown below.

In January 2017 pepper market in Brazil declined further, following reduction of available stock from 2016 harvest. Pepper price prevailed in Brazil was also reported decreased during the month under review.

Overall, the market in January 2017 was not brisk, with continuing price decrease at most origins. The market is expected to change in the next few months after output of pepper harvest in India and Viet Nam cleared.

Pepper prices prevailing in local markets are shown in Table 4 and 5, while for FOB prices are in Table 6 and 7.

Table 4: Local Price of Black Pepper in USD per MT

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

Table 6: FOB Prices of Black Pepper in USD per MT

Table 7: FOB Price of White Pepper in USD per MT