PEPPER ZOOMS ON SUPPLY CONSTRAINS, STRONG DEMAND
DATE: 02/07/2012
Indian Pepper futures zoomed on the back of fresh buying against the strong demand amid weak supplies. The buyers in the international market have been waiting for increased arrivals from Vietnam and Indonesia. The harvesting in Vietnam has completed, with a slight increase in production over the last year; but there will not be surge in arrivals in Vietnam, because pepper farmers are watching the daily price movements and willing to hold back, if the price is declining. Hence the supply situation in the world market will remain tight. In India, despite a correction in the last few days and in July/August contracts, the price is expected to increase, due to drop in supply and higher demand from institutional buyers. Strengthening rupee against dollar expected and better holding power of Vietnamese farmers will also increase the price level.
Since, the crops is yet to arrive the markets in Indonesia and the production has been sold already, even the small increase expected in productivity in selected areas, due to better weather conditions is not going to make any significant impact in the supply of pepper from Indonesia. In view of the situation explained above and higher inventory is required by the importers, the pepper price are expected to remain high due to supply constraints.
The NCDEX pepper for the August delivery zoomed by Rs 245 to Rs 41265 per quintal and was quoting higher at Rs 41210 per quintal. The open interest added 2.37% to 2,074 tonnes. Technically, the counter is likely to find next resistance at Rs 41450, Rs 41700 and support is at Rs 40940, Rs 40700 per quintal.
POWERED BY: COMMODITY INSIGHTS
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