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The ups and downs of the pepper market

September 11, 2020

1 mins read

As the pepper market is preparing for an influx of new supplies from Brazil and Indonesia, Vietnamese pepper prices hold relatively steady after a surge in May and June, caused by an increase in purchasing activity and speculative buying. The Mintec price of Vietnamese black pepper has increased by 2% in the four weeks to 2nd September, to $2,561 per tonne, and up 10% year-on-year (y-o-y). In Indonesia, prices have been easing, with the Mintec price for Indonesian black pepper ASTA FOB Lampung down 6% month-on-month (m-o-m) but relatively steady y-o-y on 2nd September at $2,837 per tonne.

The 2020 Brazilian crop harvest started in August and early indications point to a lower production this year. The International Pepper Community (IPC) estimates the size of the 2020 harvest at 78,000 tonnes, down 2.5% y-o-y. Nonetheless, this is still 16% above the five-year average.

This year’s pepper harvest in Indonesia has been delayed by COVID-19-related disruptions and heavy rains during the growing season. Most trade sources share the opinion that the crop size will be lower this year. In 2019, Indonesian pepper production totalled 78,000 tonnes, according to the IPC.

Earlier in 2020, Vietnam produced an estimated 240,000 tonnes of pepper, according to the Vietnam Pepper Association. This represents a decline of 15% y-o-y but still an increase compared to the average of the last few years. For the next season, a further decline in output is anticipated due to a reduction in the planted area as farmers have been shifting to more profitable cash crops.

Going forward, the new supplies at origins will have an easing effect on prices but some traders are already looking towards the smaller Vietnamese crop next year. Global pepper inventories remain at healthy levels, whilst coronavirus continues to hinder demand, especially in the hospitality sector.

Jara Zicha
Jara Zicha

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