Pepper June contract dropped Rs 320 and settled at Rs 39540/quintal as high domestic prices kept export demand at bay. Indian pepper is $300 to $350 a tonne costlier than rivals such as Vietnam, Brazil and Indonesia. Tight supply position will continue but gains are going to be limited because of poor exports. Industry officials estimate 43,000-45,000 tonnes of local pepper output in 2012, compared with 49,000 tonnes last year. Reports of Indonesian Pepper production are still not clear and same as for Brazilian pepper production. However, production is estimates to be higher in Indonesia which might weigh on Indian pepper prices. According to Spices Board of India, exports of pepper during April 2011- January 2012 rose by 49% and stood at 22,300 tonnes as compared to 14,950 tonnes in corresponding period last year. Indonesian production expected to rise to 41000 tonnes up from 33000 tonnes. However, global Pepper production in 2012 is expected to increase by 7.2 per cent to 3.20 lakh tonnes against 2.98 lakh tonnes in 2011. Global Pepper production in 2012 is expected to increase 7.2% to 3.20 lakh tonnes as compared to 2.98 lakh tonnes in 2011 with sharp rise of 24% in Indonesian pepper output and in Vietnam by 10%. Spot pepper dropped -194.4 rupees to 39183.35 rupees per 100 kg in Kochi market. The contract touched the intra day high of Rs 40100/quintal while low of Rs 39280/quintal. Now support for the pepper is seen at 39180 and below could see a test of 38820. Resistance is now likely to be seen at 40000, a move above could see prices testing 40460.

Trading Ideas:

Pepper trading range for the day is 38820-40460.

Pepper fell as high domestic prices kept export demand at bay.

Indian pepper is $300 to $350 a tonne costlier than rivals such as Vietnam, Brazil and Indonesia.

NCDEX accredited warehouses pepper stocks gained by 40 tonnes to 1191 tonnes.

Spot pepper dropped -194.4 rupees to 39183.35 rupees per 100 kg in Kochi market.