Saturday July 28, 2012
Local pepper prices hit by Indonesian selling pressure
By JACK WONG
KUCHING: Domestic pepper prices have weakened in recent weeks, falling to their lowest levels this year due to selling pressure from Indonesian farmers.
Kuching Grade I white pepper dropped to RM23,600 per tonne and black pepper to RM14,570 per tonne yesterday, wiping out all the gains made earlier this year.
White and black pepper rose to their highest levels of about RM27,000 and RM17,800 per tonne respectively about four months ago. Their current levels are lower than 2011's closing price of RM24,850 per tonne (white) and RM15,600 per tonne (black).
Domestic pepper prices recorded strong rally in the past two years due to tight global supply, with white and black pepper gaining a total of RM9,500 and RM6,250 per tonne respectively during the 2010-2011 period.
Malaysian Pepper Board director-general Grunsin Ayom said domestic prices had drifted lower because of the selling pressure as new crop in Indonesia hit the market.
“Indonesian farmers are selling their new crop to prepare for Hari Raya celebrations next month,” he told StarBizWeek.
Based on International Pepper Community's (IPC) projection, Indonesia is expected to increase its 2012 production to 41,000 tonnes from 33,000 tonnes last year. This year's estimated production will comprise 25,000 tonnes of black pepper and 16,000 tonnes of white pepper.
Grunsin said market players were anticipating domestic prices to rebound after Hari Raya, adding that global pepper prices had not fallen much.
“We are monitoring the market situation in Indonesia. Domestic prices will be higher than current levels when 2012 draws to a close,” he said.
Domestic supply has reportedly improved as Sarawak's new crop enters the market.
Sarawak, which contributes about 99% of Malaysia's production, has harvested between 65% and 70% of its new crop.
The change in weather pattern has delayed the maturity of the new crop.
“Due to the delay in the new crop, Malaysia's pepper exports for the first six months this year were estimated at 4,500 tonnes compared with 6,193 tonnes during the same period last year,” Grunsin said.