Major exhibition causes lull in pepper trading

The week ending October 21 started relatively slowly in the pepper market, partly due to the SIAL, international food exhibition, held from October 16-20 in Paris, Rotterdam broker Amberwood Trading observed in a report for the period.

The company noted that thousands of companies in the food industry gathered at SIAL, and this included many pepper buyers/sellers. Amberwood Trading observed a decrease in the pepper price on Monday October 17 when the market dropped about USD100-150 per tonne lower compared with the end of the previous week.

EU and US markets remain relatively quiet. As with the previous week, Amberwood Trading saw trades to smaller markets such as the Middle East and Pakistan.

According to the Vietnam Pepper Association (VPA), until the end of September, Vietnam exported 148,555 tonnes of various pepper grades (132,136 tonnes of black pepper and 16,419 tonnes of white pepper. The volume total was 32.2% higher than that of the same period last year.

Total export turnover reached USD1.206 billion, 13.49% ahead of a year ago.

The VPA’s data shows that the US led the import statistics with a total export volume of 34,457 tonnes, accounting for 23.19% of Vietnam’s total pepper exports.

The US is also the top market of white pepper with 2,774 tonnes. The average export price of black pepper in nine months reached USD7,726/tonne while that of white pepper reached USD11,239/tonne.

Tumbling prices

Amberwood Trading noted that compared with the same period of last year, Vietnamese black pepper has decreased by USD1,232/tonne while white pepper has fallen USD1,533.

These much lower prices this year are mainly due to a larger 2016 crop.

Vietnam is said to have plenty of pepper to ship in the next few months until its new crop is available. Amberwood Trading suggested this might indicate that this year’s crop is closer to 180,000-200,000 tonnes as opposed to the earlier expectations of 160,000-170,000 tonnes.

“This roughly explains the reason of the decline of the pepper market. Further information is that returns from rubber trees have been disappointed, and this is why farmers are cutting down rubber trees and planting pepper vines instead. We are even told that about 20,000 tonnes of carry-over will be rolled over to next crop. Speaking of new crop, some sellers expect the crop to be much larger. One pepper shipper even expected it will be around 250,000 tonnes,” the report added.

Amberwood Trading’s Vietnam office will perform some field surveys in Vietnam next month after the weather improves. Currently it is too stormy and wet to conduct such a survey.

On October 26, Amberwood Trading issued a prices update, indicating new crop Vietnam black pepper at USD5,500/tonne fob Vietnam for shipment in February or March 2018.