Foreign buyers have recently been reluctant to purchase Vietnamese pepper due to its high prices, tending towards buying from Indian companies, according to the Commercial Affairs Division under the Vietnam Embassy in India.
Vietnam pegged ASTA pepper lower by US$100 per ton at US$4,150 and it closed around $4,270 May 14 while India is currently quoting 500 GL at $3,770, down from $3,840 May 14. The 550 GL is being quoted by Indian companies at $4,060.
India is now in an advantageous position, since Vietnam currently quotes the highest prices in the world, said an official from the division, adding that buyers from the US and Europe are not interested in the Vietnam market due to exorbitant prices.
West Asia and Pakistan have shown an interest in Vietnam, but major buyers were hesitant to place orders. Hence Vietnam’s exporters were forced to reduce prices.
There are also reports of defaults from the Vietnamese shippers, due to rising prices, not because of low quality pepper. Exports from Vietnam touched 9,500 tons in April, excluding border trade with China.
The US and European markets have to provide for the July-December period by depending on either Vietnam or India. India will be more attractive with its price advantage. The only hurdle though would be lower tariffs offered by Indonesia.
But Indian exporters are not quoting prices for the period beginning from July, due to the high volatility in futures trading. US importers are ready to place orders at $4,050 for the July-September period, but exporters are not in a position take orders because of high volatility on the futures counters. A leading exporter said that it would be too risky to quote prices for July-December, as futures counters have been uncertain for a long period.
Indian exporters have already struck a deal with a host of countries including the US, Germany, Canada and Russia for shipments in May at $3,950. So, according to exporters, the next couple of weeks will be crucial for the global pepper market, especially that of India.
Meanwhile, speculation by Vietnamese and Cambodian traders dominates the Vietnam market amid the peak harvesting season. Overseas demand is low and unless there are some overseas orders, the Vietnamese market will suffer a serious setback.
Pepper is being hoarded through speculative trading in anticipation of further price appreciation. But this may be counter-productive, in case of weak export demand in the coming months, say experts.
Vietnam became the biggest pepper provider on earth after shipping 50 per cent of the world’s total exported pepper, or 118,000 tons worth US$195 million, last year.
The country will have to focus on industrializing cultivation and building pepper trademarks to hold its position as the largest pepper exporter in the world.
The Vietnamese Government recently approved a plan to boost pepper export value to US$240 million by 2010 and US$280 million by 2020. (Vietnam Economic Times)
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