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Global pepper mart sluggish, weak demand from EU, USA

24 Jul 2021 12:20 pm
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Kochi 24 July (Commodities Control) Black pepper mart across the world is likely to move on sluggish mode because of the weak sentiments from top importing countries like the US and EU.

According to sources close to pepper export business, market is likely to move either steady or lower for the next couple of weeks. Most of the top global players now offers almost same prices as export demand is rather weak. Fresh lots are now available in Brazil as this year’s harvesting began there.

Vietnam now offers 500 gm/liter grade at US $ 3800/ tone and 550 GL at $3850, while Brazil’s tag is US $ 3850 – 3900. Indonesia also offers US $ 3850, while India is virtually out of the global trade because of its much higher prices. India offers US $ 5700/tone, mainly due to the high level of domestic consumption. World’s leading importers had already covered their position and this may also cause poor demand for the spice.

As per the advance estimates of exporters, production might be in a range of 200,000 – 220,000 tonnes this year in Vietnam as against 270,000 tonnes in 2020. During the first half of the current year the country had shipped 170,000 tonnes. Export recorded 7 per cent dip in volume compared to 2020, according to Vietnam Pepper Association (VPA).

During last ten years global pepper production recorded 72 per cent rise at 561,500 tones. In 2010 the global output was 234,418 tones, as per the data of International Pepper Community (IPC) Vietnam, world’s largest producer contributes 43 per cent of the total output followed by Brazil.

Increase in area of cultivation helped Brazil to surpass Indonesia to grab the second spot. Brazil produces around 80,000 -90,000 tones in a year.

Meanwhile, sharp increase in freight cost and Covid related issues raised concern over shipment of spices especially that of pepper from Vietnam. Local traders said that the cost of shipping from Vietnam to countries like the US and EU increased sharply during January – June period of this year. For every month the charge of 40 foot container increases by US $ 1000.

The cost now increased to US $ 13,500 from US $ 2000 -3000 in 2020. By the beginning of this year the cost escalated to US $ 11,000 posing serious threat to the export business in Vietnam. Freight cost from countries like India and Brazil has not increased much this year, leading Vietnam to disadvantageous position. Because of this buyers from EU and USA have been switching to Brazil where first round of the harvesting commenced recently.

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