Pepper Market in 2025: Soaring Prices Outshine Shrinking Volumes

The global pepper market is in the midst of a significant transformation in 2025, as surging prices deliver record earnings for exporters despite pronounced declines in export volumes. Vietnam, the undeniable powerhouse of global pepper production and trade, continues to assert its dominance amid tightening global supply and evolving trade dynamics. Latest customs data show that while Vietnamese export volumes shrank for the seventh consecutive month, robust price gains—particularly in the United States, Germany, and India—are fueling impressive export revenues. This price rally is attributed to a multi-year contraction in global supply, shrinking domestic cultivation, adverse weather events, pest pressures, and increased farmer diversification into more lucrative crops such as coffee and durian.

Although the volume slump signals tighter supplies, the industry’s 0% export tax and VAT regime preserves competitiveness in international markets. Looking ahead, continued tightness in global supply and enduring demand from major consuming regions are expected to keep upward pressure on pepper prices. However, uncertainties around weather, rising competition from emerging exporters, and supply reorientation will remain key challenges for Vietnamese traders and global buyers in the coming months.

📈 Current Market Prices

Type / Grade	Origin	Location	FOB Price (EUR/kg)	Previous Price	Weekly Change	Update Date	Link
Pepper, black 500 g/l, faq	VN	Hanoi	5.80	5.90	-1.7%	2025-08-09	Offer
Pepper, black 600 g/l, clean	VN	Hanoi	6.38	6.48	-1.5%	2025-08-09	Offer
Pepper, black 550 g/l, faq	VN	Hanoi	6.00	6.10	-1.6%	2025-08-09	Offer
Pepper, black 550 g/l, clean	VN	Hanoi	6.08	6.18	-1.6%	2025-08-09	Offer
Pepper, black 500 g/l, clean	VN	Hanoi	6.10	6.20	-1.6%	2025-08-09	Offer
Pepper, black, 5 mm, extra bold	VN	Hanoi	6.50	6.60	-1.5%	2025-08-09	Offer

🌍 Supply & Demand Dynamics

• Vietnam exported 22,000 tons in July 2025, generating $142 million (down 8% in volume and 10% in value from June).
• Year-to-date: 144,000 tons exported, $989 million total value. Export volume down 12% year-on-year, but value up 29.7%.
• The US, Germany, and India remain the largest buyers, but notable shifts include: 24% volume drop to the US, 3% drop to Germany, 7% increase to India.
• Average export prices to all three surged between 48% and 60% YoY, resulting in a net gain in export earnings.
• Vietnam’s cultivated area for pepper has declined from 115,000 ha (2023) to ~113,000 ha (2024), with ~110,000 ha expected in 2025 due to weather, pests, and crop diversification.
• Global production set to contract for the fourth year, keeping markets tight and favoring sellers.

📊 Market Fundamentals

• HS code 0904: 0% export tax and VAT supports competitiveness.
• Vietnam supplies ~40% of global output and nearly 55% of export value.
• Over 200 processing and trading enterprises; five FDI companies handle nearly 30% of exports.
• Fourteen deep-processing facilities operational, further strengthening value-add within the country.
• Continued market focus on sustaining inventories and monitoring price trends is crucial for stakeholders.

🌦️ Weather Outlook & Crop Impact

• Key Vietnamese pepper regions—Gia Lai, Dak Lak, Dak Nong—are experiencing intermittent dry spells and lower-than-average rainfall. This is likely to stress vines, reducing yields, and further tightening supply predictions for the 2025 harvest.
• Meteorological forecasts suggest continued El Niño-like conditions with sporadic rainfall through late Q3, potentially impacting flowering and fruit set adversely.
• Major Indian growing states (Kerala, Karnataka) and Sri Lanka are seeing more favorable monsoonal conditions, possibly boosting output but not sufficient to offset the global deficit.

🌏 Global Stocks & Production Comparison

Country	2025 Output Estimate (kt)	2023/24 Output (kt)	Share of Global Exports (%)
Vietnam	210	222	~55%
India	70	65	10%
Indonesia	68	68	7%
Sri Lanka	19	18	3%
Brazil	65	66	7%
Others	40	40	18%

📌 Key Market Drivers

• Declining global stock-to-use ratio for pepper for four consecutive years—current world stocks seen at multi-year lows.
• Reduction in Vietnam’s cultivation area and yield-per-hectare, largely due to climatic and crop-switching pressures.
• Global demand stable/moderately rising, especially in foodservice and processed food sectors; steady import requirements in US and EU.
• Speculative positioning remains strong as investors anticipate continuing tightness through late 2025.

📆 Trading Outlook & Recommendations

• Expect continued price buoyancy, supported by shrinking supply and resilient global demand.
• Procurement: Buyers should secure medium-term contracts now, as further increases are possible before Q4 if weather stress persists in Vietnam.
• Vietnamese sellers should leverage strong US and German price premiums but remain vigilant of rising competition from India and Brazil.
• Stock and cash flow planning—a priority for exporters due to shrinking domestic inventory and potential for increased price volatility.
• Closely monitor weather developments in Southeast Asia and Indian monsoon progress.

🔮 3-Day Regional Price Forecast (FOB EUR/kg, Vietnam)

Date	Black FAQ 500 g/l	Black Clean 600 g/l	Black FAQ 550 g/l	Market Sentiment
2025-08-10	5.78	6.35	5.98	Bullish
2025-08-11	5.81	6.39	6.01	Bullish
2025-08-12	5.83	6.42	6.04	Bullish

Sentiment: Prices expected to recover slightly as global supply concerns persist and buying interest stays firm.