Monthly Publication

Pepper market situation in 2015 will depend largely on developments in production during the year. In the short term, the market may be slightly affected by the situation of harvesting season in India and Vietnam. Global pepper production in 2015 is estimated to be better from 2014, as production of pepper in India is reportedly better this year. Since stock brought forward from 2014 is limited, production of pepper from India in 2015 is likely adequate to meet the demand of local industry. Although average price in January 2015 was lower from average price in December 2014, the price during the year is expected not to be changed significantly.

During January 2015, the Price Index decreased by 16.96 and 22.14 points for black and white pepper respectively (Table 1). The composite price of black pepper decreased by 5.1% to US$ 9,178 per Mt from US$ 9,666 per Mt in December 2014, while that of white pepper decreased by 6.9% from US$ 13,649 per Mt in December 2014 to US$ 12,706 in January 2015 (Table2).
Table 1. IPC Price Index (Base Year: Average 2006 - 2010)

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

In January 2015 the market price has shown a decreasing trend, compared to the previous month, in response to the anticipated good harvest in India. As reported in the last 42nd Session of IPC, held in Vietnam, production of pepper in India is estimated to be around 70,000Mt in 2015 as against 37,000 Mt in 2014. The significant increase was mainly due to favorable weather condition during this year crop season in Kerala and Karnataka. 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. Although the price showed a declining trend, it is still relatively higher, (INR 618 or US$ 10.1 per Kg) in Kochi, when compared to average price prevailed in January 2014 (INR 494 or US$ per Kg).

Vietnam, the largest pepper producer and exporter, has an important role in determining market direction. This year production of pepper in Vietnam is estimated to be slightly lower than the previous year. Old pepper plantations in Dak Lak and Gia Lai were reported to have low productivity and diminishing acreage. Pepper market in Vietnam is still calm as carryover stocks from last year harvest is negligible. Market is expecting fresh crop from new harvest and the initial harvesting has started in Southern region and in Central highland but peak harvest will commence in March. In January pepper has gradually started arriving in the market. During January, price of black pepper in Vietnam decreased to VND 156,000 from VND178, 000 and of white pepper VND 247,000 from VND 260,000 per Kg at the beginning of the month. On an average local price of black pepper in January decreased by 11% from average price in December 2014; while for white pepper decreased at lower rate by only 3%. In the case of FOB price, the decreases were reported marginal.

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 starts in July. Although prices were relatively stable, since no stock available with farmers, almost no activity throughout the month reported in local market. Production of pepper in Indonesia during this year is expected to be better.

According to the information received from farmers, fruit setting of pepper in most pepper gardens in Indonesia during this year is reported to be good. Heavy rains occurred almost daily during the month is anticipated to affect crop size. Considering good overseas demand and increased domestic consumption, it is expected that the output will be easily absorbed by the market and price is expected to remain firm this year. During January, black pepper price in Lampung was at the level of around IDR 107,000 per Kg, a marginal decrease from IDR 110,000 in December 2014. In Bangka, white pepper price decreased by around 7% to IDR 148,000 per Kg in January 2015.

In Sarawak, Malaysia, production of pepper is also estimated to be slightly better this year and the next harvest is expected to begin in May. During the last IPC Session held in October 2014, Malaysia has targeted to export 15,000 Mt of pepper during 2014. However, up to December 2014 total export of pepper from Malaysia was around 13,430 Mt; though lower to the estimate, an increase of around 10% from 12,110 Mt in 2013. During January 2015, local price of Sarawak black decreased marginally by MYR 1 per kg to MYR 26.6 and MYR 37.6 per kg respectively, for black and white pepper. In respect of FOB price however, the price was relatively stable during the month.

As reported earlier, a marginal increase of production of pepper in Brazil is anticipated this year. The harvest is expected to begin in September/October. Currently stock carry over from last year crop is adequate to meet demand until new material from this year crop available in the market. Producers and exporters are reported to be not eager to release the material immediately under the situation of declining price trend. They are expecting price to rise which usually happen after Chinese New year. In January 2015 pepper price in Brazil decreased by around 8% both in localmarket as well as FOB. In Sri Lanka, pepper price decreased by 10% in January.

Although, overall production of pepper in India and Indonesia increased this year, the fall in the output in Vietnam and increased absorption of industrial uses, the increase in production will not affect the global supply much. Hence, global pepper prices are likely to remain firm during the year.

Pepper prices prevailing in local markets are shown in Table 3 and 4, while for FOB prices are in Table 5 and 6.

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

Table 4: Local Prices of White Pepper in US$ per Mt

Table 5: FOB Prices of Black Pepper in USD per Mt

Table 6: FOB Price of White Pepper in USD per Mt

Fig. 1. World Pepper Production and price behavior.

Overall global pepepr production during last six years have not indicate a significant change except year vto year fluctuations. However, the prices of Black and white pepepr indicate an increasing trend starting from US$2.4 in 2009 to reach at US$ 9.7 by 2014 for black pepper and from US$ 3.8 in 2009 to US$ 13.0 by 2014 for white pepepr. Based on the over all information avilable up to now the price trend seems to continue the same during 2015 and the total global production of peppe rexpected to reach at 400,000 Mt.