Black Pepper : World Market Review

The pepper market in the past two weeks has witnessed price increases rapidly due to Chinese speculators continue to aggressively buy and push prices up from $50 to $100 within a day very common. Just over 10 days the price has increased rapidly $500 per ton. This is a shock not only to the exporters and domestic agents but also to the importers when the market almost slightly changed throughout June and most of July.

Vietnam:  

Exported 19,000tons in July, bringing the total export data for the first seven months to 145,000tons, up 20% from 2016. This year statistics shows that about 18,000 to 20,000 tons of Chinese through border trade. The market is continuously very hot and firmer tone day after day from last 10 days until now with large amplitude, middleman/agents and farmers are still stocking although the demand of the whole market is very slow. The main reason is that Chinese traders are currently stockpiling in huge quantities. At present, Chinese traders continue to visit exporters / agents / warehouse and asking a large quantity from 1000 - 5,000 tons for each order. However, in reality they do not deposit money or just take advance payment very small quantities and then do not take the goods. This has been creating a virtual demand in the market in large quantities and shortages of local raw material in a short time. Chinese traders will rely on a favorable time to sell back to Vietnam through smaller retailers at the border in order to take profit and reduce inventory in Chinese market. This distorts the market when it does not accurately reflect the actual demand and impact on the psychology of farmers as well as agents continue to buy in stocks that push up domestic prices rapidly.

India:

There are mainly demanding from Sri Lanka and Vietnam. However, the quantity is not much. At present, India's prices are still the highest in the market. India's crop is expected to harvest early in November 2017 with production expected better than the 2016 crop due to favorable weather. However, it is still too early to mention about the Indian crop, we hope to have more information in the near future and keep you updating later. After long time Black Pepper online future trade has started which makes effect to bring the Indian Black Pepper prices competitive in the International market.

Cambodia:

Continue to look like Vietnam as Chinese traders continue to enter through the Cambodian border. At present, Cambodia's inventory is about 10-15,000 tons. Cambodia's raw materials are mainly concentrated in the border line into Vietnam.

Brazil:

According to a Brazilian expert, the weather seems to be more favorable and the Para region has started to harvest with output of 35-40k tons. The main crop will be in September and Brazil's prices are currently the most competitive in the market and lower than Vietnam and Indonesia

Indonesia:

Indonesia is still harvesting but due to heavy rainfall, it does not support pepper picking and drying. The 2017 season is less than 2016 but it is difficult to know exactly when Indonesia's crop is unclear and unpredictable who always mentioning less crop every year. However, the source of supply is expected to be abundant in the next 10-15 days as farmers harvest and gather raw materials. Currently Indonesia is offering the same price as Vietnam for black pepper.

Following Reasons can makes market to go up and go down.

Reasons for Market to Go up

The weather of Vietnam and Indonesia continue to rain. Therefore temporary supply shortages.

• Chinese continues to manipulate the market and pushing prices continue move up to solve inventory in China as well as selling back to Vietnam through small agents to take profit.

• Middle East will enter the market and showing more demand in third quarter.
• Farmers and agents in Vietnam will continue to hold and only sell very small quantities to cover minimum costs. They will no hurry to offer big quantity when new crop 2018 still far.
• Oversea buyers will enter the market to cover demand for third and fourth quarter 2017

Reasons for Market to Go down

• The weather is better in Indonesia so farmers will be able to harvest and dry more easily, increase their supply to the market.
• Brazil will pick the main crop in September like Indonesia so the supply in September will be plentiful
• Vietnam exporters have fewer export orders in August and less in September so there will be no buying pressure.
• Vietnam's inventories are still very large despite exports of 145k tons in 7 months (including about 18,000 to 20,000 tons of Chinese. From 2014 - 2016 not included in the export figures).
• The amount of raw material imported from Cambodia through border trade for export is expected to be about 15k tons in the first 7 months)
• The importers are quite indifferent despite the sharp increase in prices. It looks like they have had enough inventories for third quarters and have not rushed to market in fourth quarter 2017.
• Buyers have another option to cover from Indonesia and Brazil. This will put pressure on inventory from farmers in the coming time during Sept 2017.

(Sources: Exporters Reviews from Vietnam)