Global pepper demand has surged in the last two months with millions of people confined to their homes due to the pandemic. And the experimenting home chefs across the world seem to have to consumed more than usual so as to offset the consumption shortfall from restaurants and institutions, traders said.
Jojan Malayil, chief executive of Kochi-based Bafna Enterprises, feels that the consumption has baffled the trade with some dealers in Vietnam succumbing in the chaos.
“Pepper prices have increased in most markets with demand seen robust despite the constraints of a global pandemic. Household consumption in the US, Europe and China have more than offset the consumption of big companies. Traders in Vietnam who had sold short were caught unaware and have suffered huge losses,” he said.
Vietnam prices have increased by $500-600 per tonne in few weeks to touch $2,400-2,600 per tonne, he said, adding that the turning point was China buying 20,000 tonne after they reopened. He said that pepper prices have surged by 30-40% in all origins.
Jojan expects a firmer market in the short term. “Indonesia is now reporting a 20% shorter crop that will be harvested by the end of July. Indian demand continues to increase compared to previous months. US is seen active in the market with orders delivered till second half of 2020.We expect increase from the EU when other origin do not have big quantity for immediate shipment ,”he said.
However, Rajiv Palicha of Nedspice India seems to disagree and feels that market is subdued and looking for direction.
“Vietnam was firm for some time but it has now corrected. They have sizable crop and lot to ship and continue to be the most competitive origin,” he said. He adds that China is not seen consuming as they do normally in the season.
Palicha feels that the market will also take into account the reports of a normal monsoon and good rains the pepper growing regions.
Pepper Crop Report 2020 by Nedspice estimates that the total pepper production in crop season 2019-20 at 5,58,000 tonne, which still remains significantly higher than total demand of 4,96,000 tonne. The report adds that the excess production will cause global stocks to increase further, as it is likely to take some time before supply lines align with demand. Prices are close to or below production costs in many countries.