KUCHING 06/23/2010:
Pepper prices have soared with black (pepper) surging more than RM1,000 or 12% per tonne to RM10,500 per tonne in the domestic market since early this year.
The Malaysian Pepper Board director-general Grunsin Ayom said the price rally was due mainly to strong global demand and a projected supply shortfall.

It has been anticipated that there will a 10% drop in global pepper production this year.

Grunsin Ayom says pepper prices are expected to remain firm for the rest of this year. “Prices are on the uptrend and expected to remain firm for the rest of this year, with black pepper trading in the range of between RM10,500 and RM11,500 per tonne,” he told StarBiz. “There is strong interest by Middle-East countries which are buying for the (coming) Ramadan ( fasting month). There is also strong demand from Japan, China and the US.”
He noted that China had imported about 600 tonnes of the commodity from Malaysia in the first four months of this year. China, which produces between 20,000 tonnes and 25,000 tonnes a year in Hainan province, imported nearly 1,800 tonnes from Malaysia last year. Malaysia also supplies about 60% of the 8,000 tonnes imported annually by Japan.

Grunsin said the price surge of late was also due to buying by exporters to fulfil orders from foreign clients.
The International Pepper Community (IPC) has predicted a 10% increase in global consumption to about 320,000 tonnes this year, according to Grunsin.
He said major pepper producing countries, like Vietnam and Brazil, were expecting a 10% drop in production this year because of disease and other factors.
Vietnam, the world’s No 1 pepper producer, has harvested its crops and sold more than half of its production this year. Vietnam contributes about 30% of the world’s pepper production and exports.

Malaysia ranks as the world’s sixth largest producer and fifth largest exporter of pepper.
India is the world’s second top producer, while Indonesia and Brazil are also major pepper producers.

Black pepper had already enjoyed a good run last year, with average domestic prices closing at about RM9,400 per tonne in December, up from RM6,500 per tonne at the beginning of 2009.
The domestic price of white pepper has not risen as much as black pepper, and is now hovering at around RM16,000 per tonne compared to RM15,300 per tonne early this year and a low of RM11,300 per tonne in 2009.
This is because the demand for white pepper is not as good as the black variety, according to Grusin.
Pepper prices hit historical highs of an average of RM16,000 per tonne for black pepper and RM28,000 per tonne for white pepper in 1999.
From those peaks, the prices plunged to about RM4,000 per tonne (black) and RM6,500 (white) in 2004.
Sarawak, which contribute more than 95% of Malaysia’s total pepper production, exported 3,940 tonnes of the commodity in the first four months of this year. Malaysia’s total exports of pepper for last year amounted to 13,000 tonnes.

JACK WONG
Source: The StarBiz