Monthly Publication

In the previous few months pepper prices showed a continuous declining trend, particularly in Indonesia, Vietnam and Malaysia till mid-week of November and from third week onwards prices in every producing country started slowly moving upwards.

In November 2016 the IPC pepper price index decreased 5.27 points for black and 2.40 points for white pepper (Table1). The price index has slide down below 100 which is the base price (average composite price of last five years). Decreased price at major exporting countries like Vietnam and Indonesia has contribute to the lower price index. Composite price of pepper has decreased by 5.23% and 2.40% to US$ 7,110 and US$ 10,126 per mt for black and white pepper respectively, for the month of November 2016 (Table 2).

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

In November 2016 the market were relatively with lesser business activities in pepper, since price in many producing countries ruled at lower level. Under this prevailing situation, producers generally hold back limited stock, expecting to have better price in future. Prevailing pepper prices in many of the producing countries has decreased quite significantly in the local markets.

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

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

In India the decrease had been marginal and Sri Lanka price was quite stable, as it is more influenced by price in India because of efficient bilateral trade, while in Malaysia, Indonesia and Vietnam price decrease had been considerable. Price in China has also decreased by 2% in the local market.

Current declining trend of pepper price were mainly influenced by the situation of excessive pepper supply from Vietnam into international market, exceeding the projected volume. Surpassing the estimated target of export from Vietnam is only possible supported by excellent harvest this year, since supplies from other producing countries were minimal. It is presumed that more than 170,000 Mt of pepper production has resulted from present year harvest. It is well noted that production capacity of pepper is increased from year to year as a result of area expansion program taken place in the last few years as a response toward the continuing price increase in the last ten years.

As per prevailing price trend in Vietnam, black pepper of local price has decreased by 7% and fob price has decreased by around 5%, while, white pepper price has decreased by 4% compared to previous month. Closing the month however, prices in Vietnam has shown an upward trend.

In Indonesia, local price of black pepper has decreased by 9% in Lampung. In addition to the real decrease, weakening of local currency has also contributed to the decrease. In Bangka marginal decrease of 1% has recorded. The price decrease in Lampung was mainly influenced by declining price trend in Vietnam as the lalrgest pepper exporter. Moreover Indonesia also supplies pepper to Vietnam for re-exports.

In India the price has decreased marginally, but in Sri-Lanka price was quite stable. The approach of harvesting season in India was likely the main reason for the price decrease in India. Out of the pepper harvested in India is mainly absorved in local market. Similarly for Sri Lanka, from its comparatively lower production is only to meet local demand and exports to India.

In Malaysia, Sarawak pepper has decreased significantly during the month. Local price of pepper in Sarawak recorded as the lowest among the prices occurred in local markets of other producing countries. The local price reported in sarawak was the price offered by local traders to farmers for unprocessed pepper. Lot of treatment has to be made to meet export quality. In addition to the above, current situation of huge supply of pepper production in Vietnam has a significant implication on the local market price. Weakening of Malaysian Ringgit against the USD is also contribute for the lower price.

Observing current scenario of changing weather conditions in the producing countries, like heavy rains occur every day in Indonesia as well as un-favorable weather situations also reported in some producing countries, we may have to wait and see the development to conclude the prospect of the future market by early 2017 when harvest from India and Vietnam picks up.

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

Pepper price changing pattern in producing countries

Pepper price in the last ten years showed an increasing trend. In general price moves in a similar pattern from time to time. When the price tends to go up, almost all prices in domestic as well as international market will move upward, and vice versa, although not always move proportionally. Deviations from the general pattern may occur in certain years in view of prevailing country specific condition which would have taken place.

In the last ten years, there were two different price patterns in producing countries. Price changes in India and Sri Lanka move in a particular pattern when compared to different price movement in Vietnam, Indonesia and Sarawak in similar pattern. Price movement in Lampung, Indonesia is influenced by price movement prevailed in Vietnam, the largest pepper supplier. Sarawak Pepper price had been also influenced at a lower intensity. Price in Sri Lanka is mostly determined by price movements in India, since major portion of Sri Lankan pepper gets exported to India for value addition purpose.

From chart shown above it is seen that in 2013, 2015 and 2016, price changes in India and Sri Lanka moved to a particular direction when compared to price pattern shown in other producing countries.

In the year 2013 pepper price in Indonesia and Vietnam had increased, but in India and Sri Lanka it had decreased due to significant increase in production. In Sarawak, the price was relatively stable during the year. Deviation had also taken place in 2015, where price trend at almost all producing countries increased, but price in India again decreased. This was due to significant increase of production during the year from 37,000 Mt in 2014 to 64,500 Mt in 2015. In 2016 (up to October 2016), price trend in Lampung (Indonesia), Vietnam and Sarawak showed a significant decrease; while in India and Sri Lanka keep on increasing trend.

In November 2016, the price trend has again changed. Pepper price in Vietnam and Indonesia has showed an increasing trend, but in India and Sri Lanka decreased. Price increased in Vietnam and Indonesia reflected the supply from these sources has limited supply. In 2017 the market will mainly depend on the crop situation in India and Vietnam. Observing current weather condition reported in Vietnam, Indonesia and India, it is predicted that production of pepper in 2017 in these countries would be not as good as projected earlier and price stabilization is expected to happen in 2017.