Monthly Publication

During July 2013, the Pepper Price Index increased marginally by 0.68 points for black pepper and 0.51 points for white pepper from 216.09 and 211.09 respectively in June 2013 (Table 1). The composite price of black pepper increased slightly by 0.3% to USD 6,248 per MT from USD 6,228 in June 2013, while that of white pepper decreased by 0.2% from USD 8,997 per MT in June 2013 to USD 9,019 in July 2013 (Table2).

Table 1. IPC Price Index in US$/MT (Base Year: Average 2006 - 2010)

Note: The price index is calculated based on price developments during 2006-2010
Table 2: Composite Price of Black and White Pepper in US$/MT

In general the market was steady during the month of July 2013, with limited activity. In some sources however, trading was more active and firmer compared to previous month-s situation.

Though there was a selling pressure in Lampung, Bangka and Kalimantan of Indonesia and the farmers need cash for buying things in anticipation of Lebaran celebration, the price of pepper remained high even increased from IDR 54,000 per kg on the third week of July to IDR 57,000 mt in the late of July.

The increase was due to continuous high demand both in local and international markets, coupled with the situation of lower output reported from the current crop in Indonesia. Earlier information spread regarding anticipated price fall following pepper harvest in Indonesia did not happened. The price increase during the harvesting month has confirmed that production of pepper in Indonesia decreased significantly.

In the field surveys conducted by the IPC in June/July 2013, it was observed that many pepper plants in Lampung were not healthy. Fruit setting of the pepper berries was not uniform. On an average only 50-60% of pepper berries was seen in every spike. Due to high labor cost, the pepper is harvested only one time. Hence, light berries from this year harvest were anticipated to be more.

In Bangka, the situation was slightly better when compared to the crop situation in Lampung. Young pepper plants and healthy plants were observed, but output of this year harvest is estimated to be not much different with the last year output.

Indication of decline in production during this year is also confirmed by the decrease in the volume of export this year. During January - July 2013, pepper export from Lapung was only 8,000 mt as against 12,000 mt in the same period last year. The monthly export of pepper decreased continuously from 2,250 mt in January to 526 and 324 mt in May and June 2013 respectively. Given the availability of material from current harvest, export of black pepper in July increased to 2,576 mt, but still lower compared to 3,675 mt exported in July 2012.

Export of white pepper from Bangka is also not much different. During the first seven months, export volume of white pepper from Bangka was around 3,740 mt, which is more or less same as exported in the same period last year. Considering export from other ports, a volume of 15,800 mt (9,000 mt of black and 6,800 mt of white pepper) is estimated to have been shipped from Indonesia during the first seven month of this year as against 22.780 mt in the same period last year (17,190mt of black and 5,590 ms of white pepper).

Pepper production in Vietnam reported in early this was slightly lower. Up to July 2013 Vietnam has estimated to have released 94,000 mt of pepper out of the target of 110,000 mt set for the export this year. This means pepper stock in Vietnam has been depleted and hence a volume of only 16,000 mt is expected to be released from Vietnam during the remaining months.

Pepper production in Malaysia is reported to increase slightly this year. During 2012 export of pepper from Malaysia was only 10,588 mt. In line with the production increase, total export this year is also expected to increase. During January - July 2013, Malaysia is estimated to have exported pepper at around 5,540 mt which is more or less same as last year corresponding period-s exports. The lower export from Malaysia in the last year and in the first seven months of this year reflected the limited exportable surplus of pepper available situation from Malaysia. Marginal increase in production expected this year may not be influencing much the market direction.

Currently, the market is watching on the development of pepper in Brazil, which is expected to harvest their pepper in September. According to some sources, production of pepper in Brazil this year is estimated to be more or less same as last the year harvest. In Sri Lanka production of pepper is around 18,000 mt this year, which is mostly absorbed by Indian market, while in India pepper harvested in early this year has been absorbed by the market, mostly to meet the internal demand.

Observing this situation, there is no fundamental reason for price decrease and price is estimated to remain high until significant development in production takes place.

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