Black Pepper Prices are Likely to Increase in Medium-Long Term

Market Overview 

Currently, the supply of Black Pepper is expected to be marginally below demand at 510.000 mt. As a result, the global stock has decreased, but it is above the annual demand.

Despite the low production of Black Pepper in Vietnam due to unfavourable weather during the standing crop, the other Black Pepper producing countries are balancing overall global production. This brings the global stocks to be similar to last year.

With good demand for the product across the world, the price of Black Pepper is expected to increase in the medium-long term while staying primarily stable during the short-term period. According to experts, the price increase is likely to encourage the stockholders to get rid of their old stocks, which will buffer the upward price trend for a while.

Currently, the stockholders are getting nervous about the condition of the new crop, hence adding pressure to sell out the old stock. This contrasts with the local traders being hesitant to get rid of their stocks at a lower price after they incurred losses last year.

Pricing

During the last year, between April and October, the price had stayed steady for the crop, but it dropped by 6 per cent during the previous month.

The factor impacting the price of the Black Pepper is the increase in the freight prices, which is adding immense pressure to the supply chains.

As per the experts, the present market is a lull. However, it is expected that within a few weeks, the activity in the market will pick up as the new crops will start arriving in the market.

China’s imports can become a significant factor in determining the price of Black Pepper.

Demand For Black Pepper

The EU has imposed a new regulation on Black Pepper imported from Brazil. Every consignment arriving in the EU from the country will undergo official testing and certification from January 2022. Every Brazilian Black Pepper consignment in the EU needs to have a certificate stating the absence of salmonella.

Vietnam, one of the crop’s leading producers and exporters, is expected to have a 10 per cent lower crop size to 188.000 mt. Furthermore, the yield can also decrease due to the harsh weather conditions the crop faced earlier. The harvesting is late so the new crops will arrive between March and May.

By 2021 Vietnam exported about 250.000 mt of the crop, which is 5 per cent lower. This is mainly due to the decrease in the Chinese demand for the product. However, in 2020/21, Vietnam exported a significantly higher quantity of crops to China.

In India, the domestic demand for the crop has kept the market steady in January.

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