Pepper October contract dropped Rs 450 and settled at Rs 43200/quintal as lack of demand from overseas markets weighed on prices but downside was limited due to tight supply situation in spot markets as farmers, reluctant to sell at lower prices, held back supplies. Pepper prices are not sustaining at higher levels due to the weak export demand for Indian parity due to its higher prices in the global markets. New crop from Indonesia is likely to reach in the market from mid September and crop size is expected to be normal during the year. Indian exports of pepper fell by 47% in April 2012, according to Spices Board of India. The export is at 1,200 tons as compared to 2,266 tons in April 2011. India imported 1,848 tons of pepper till March 2012 and has become the third country to import such large quantity after UAE and Singapore. Vietnam, the largest producer of the black spice, is selling at a much lower level as compared with Indian pepper and this is weighing on local prices. According to the latest updates from India Pepper and Spice Trade Association (IPSTA), Kochi, Pepper arrivals increased to 80 from 60 quintals and offtakes jumped to 80 quintals from 60 quintals over previous close. Spot pepper gained 50 rupees to 42100 rupees per 100 kg in Kochi market. The contract touched the intra day high of Rs 43730/quintal while low of Rs
43125/quintal. Now support for the pepper is seen at 42973 and below could see a test of 42747. Resistance is now likely to be seen at 43578, a move above could see prices testing 43957.

Trading Ideas:

Pepper trading range for the day is 42747-43957.

Pepper dropped due to as lack of demand from overseas markets but downside was limited due to tight supply situation

Pepper prices are not sustaining at higher levels due to the weak export demand for Indian parity

NCDEX accredited warehouses pepper stocks gained by 53 tonnes to 3340 tonnes.

Spot pepper gained 50 rupees to 42100 rupees per 100 kg in Kochi market.