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During the last two years, pepper prices decreased significantly by around 50% as shown in the Figure 1. Substantial increase of production in Viet Nam and Brazil during 2016 and 2017 were likely the main factor affecting the significant decrease. In August 2017 the price showed an improvement following seller attitude in Viet Nam to hold back materials in anticipation of lower production in the upcoming year's crop season.

Price index of pepper during August 2017 has increased by 5.96 and 5.69 points for black and white pepper respectively (Table 1). The composite price of black pepper increased by 9.7% to US$ 5,010 per Mt from US$ 4,567 in July 2017 while that of white pepper price increased by 9.3% from US$ 6,341 per Mt in July 2017 to US$ 6.930 in August 2017 (Table 2).

Table1. IPC Price Index (Base price: Average 2011 - 2015)


Note: The price index is calculated based on price developments in 2011-2015

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

In August 2017 pepper market has strengthened with limited activity. It is understood that producers in Viet Nam hold back their material onto stock, in anticipation of probable production decrease of upcoming year's crop season. In Lampung and Bangka output of this year crop season is also less. On the other side, buyers were also reluctant with price offered. They are expecting to get lower price following start pepper harvesting season in Brazil which is reported to be better this year.

In Viet Nam local price of black pepper was at the level of VND 92,000 per Kg in August 2017 as against VND 78,000 per Kg in July 2017. Likewise for white pepper, it has increased from VND 118,000 per Kg in July to VND 127,500 per Kg in August 2017. On an average local price of pepper in Viet Nam increased by19% and 9% for black and white pepper respectively.

In Indonesia, local price of pepper in Lampung increased by 15% while in Bangka the price were reported stable. Significant increase was reported from Malaysia, where local price of Sarawak black in Kuching increased by 30% in August 2017.

Although production of pepper in Indonesia decrease and price of Lampung black increase during the month, expecting price to increase further in near future, seems to be heavy. Huge quantity of pepper from Viet Nam is reported to have flooded Indonesia through Papua New Guinea. In the second semester, a significant increase of supply from Brazil is likely to become a factor influencing market direction.

Pepper export this year is estimated to increase significantly, particularly export increase in Viet Nam, Brazil and Sri Lanka. Up to July 2017, Viet Nam has exported 147,300 Mt of pepper, consisting of 131,200 Mt of black pepper and 16,100 Mt of white pepper. When compared to export of 120,700 Mt in the same period lat year, an increase of 22% was recorded. Up to December 2017, an export volume of 200,000 Mt is estimated to be easily realized this year. When compared to export in of 134,000 Mt in 2015 and 179,000 Mt in 2016, an increase of around 50% is achieved over the last two years.

From Brazil it was reported that up to June 2017 Brazil has exported 21,000 Mt of pepper as against 16,000 Mt in the same period last year. It is estimated that up to December 2017 export of Brazil would be around 45,000 Mt, an increase of around 45% from 31,100 Mt in 2016.

In the first seven month Asian counties has absorbed more portion of pepper exported from Viet Nam. The strongest increase was seen in the Papua New Guinea markets imported 10,835 Mt, Sri Lanka 3,107 Mt and Iran 2,282 Mt. Other markets also saw strong growth, such as China, Pakistan, Saudi Arab, Thailand, Myanmar, etc. It is observed that pepper imported into Papua New Guinea is later entered Indonesia by land. Another situation also reported is in addition to entering directly to India, Vietnamese pepper also indirectly imported via Sri Lanka and Iran. This was likely the main factor influencing current market situation.

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 below.

Table 3: Local Price of Black Pepper in USD per MT

Table 4: FOB Prices of Black Pepper in USD per MT

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

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