Pepper cools off as RI's supplies rise

Pepper cools off as RI's supplies rise

NEW DELHI (Reuter): Indian pepper prices are easing off record highs as supplies from Indonesia and other Southeast Asian countries begin to hit the market, trade officials and exporters said on Monday.

Prices soared in April due to a squeeze in world supplies and growing demand from the United States.

"Pepper prices are slightly down after we had hit record highs last month," said P. Sethuram, secretary of the Indian Pepper and Spices Trade Association (IPSTA).

Prices softened as Indonesia exports began to trickle out, Sethuram said in a telephone interview.

He said the bulk of Indonesia's crop had yet to arrive.

"In another four to six weeks time the Indonesian crop will come. The Malaysian crop will also come in four weeks," said Sethuram. "Vietnam has already started offering."

India produces about one-third of the world's annual pepper crop of 180,000 tons. Other major producers include Brazil, Indonesia, Malaysia and Vietnam.

It produced 62,000 tons of pepper in 1995/96 (November- October) against 55,000 tons in 1994/95. It has set a production target of 55,000 tons for the current year.

India exported about 35,000 tons of pepper in the 1996/97 (April-March) financial year compared with 24,150 tons in the previous year, officials said.

India's exports are targeted mainly at the United States, Europe and Japan. The remainder is consumed domestically.

Traders said spot pepper was being quoted at 11,800 to 12,000 rupees ($330-335) per quintal, or 100 kg, a drop of 400 rupees from April's record levels.

"The prices had reached a hump," Sethuram said.

He said importers were building up stocks but were reluctant to buy above 12,500 rupees a quintal.

"U.S. buyers are holding off a bit because the Indonesian crop is slightly cheaper," said Kishore Shamji Kuruwa, chief executive of Kishore Spices.

He said prices were still very high compared with last year.

"It is a technical correction after moving up."

Traders said growth of fast-food restaurants in the United States and parts of Europe has spurred demand for pepper.

They said the Chinese and Sri Lankan grades were not easily available and India was the only country now offering the spice. Sethuram said India consumed relatively more of its own pepper output than other producing nations, shoring up prices.

"The domestic market in India and very high buying interest in the U.S. had pushed up the prices," Sethuram said. "The future will depend on market releases from Indonesia and Malaysia."

Kishore said India's demand for pepper had tapered off now that the hot summer months had arrived.

Pepper is used mainly by meat packers, commercial bakers, pickle packers and condiment manufacturers.

Exporters said 20 percent of India's pepper exports were in value-added form, used in oleoresins, essential oils, pepper in brine, dehydrated pepper, pepper powder, white pepper, dried pepper and sterilised pepper.