The global pepper market is forecast to face a supply shortfall next year which will certainly drive prices up, so local traders should not hastily sign contracts with buyers to avoid losses, Saigon Times daily on October 29 quoted the Vietnam Pepper Association (VPA) as saying.

Tran Duc Tung, office manager of VPA, said farmers usually sell pepper in bulk at harvest time in the first quarter to cover investment costs and other expenses on Lunar New Year holidays. Therefore, selling prices are often low in the first months of year.

Currently, Vietnam is accounting for 30 percent of the global pepper production and 50 percent of the commercial volume in the global market.

Tung said the export pepper price hovered around 6,500 USD per tonne in the first half of this year, but traders have almost emptied their pepper stocks at this low price.

The total amount of pepper export in the first six months was equal to that of 2013. However, when the pepper price shot up to more than 8,000 USD per tonne in July, there was little left.

Many local businesses suffered losses because they had signed contracts at low prices and found it tough to secure sufficient pepper for delivery. The losses are all the deeper now as the export price is approaching 10,000 USD a tonne.

“Pepper is a commodity with price volatility. Therefore, businesses should avoid signing futures contracts. Contracts should only be signed when traders have secured 70 percent of the volume in stock,” Tung suggested.

“VPA gives such recommendations based on production and trading situations so that farmers and businesses can avoid losses,” he said.

Statistics from VPA showed the export price of pepper was 6,500 USD per tonne in the first quarter before going up to 8,335 USD in July and over 9,000 USD in September, rising by 1,800-2,500 USD per tonne in just a few months.

The local price increased from 149,000 VND a kilo in the first quarter to 190,000 VND in September. Pepper price in the market on October 28 was 182,000-189,000 VND per kilogram.

According to the Ministry of Agriculture and Rural Development (MARD), the continuous increase helped raise the average export price in January-September to 7,558 USD per tonne, up 14 percent year-on-year. The export volume in the first 10 months of the year was 145,000 tonnes worth more than 1.1 billion USD, rising 18.5 percent in volume and over 35 percent in value compared to the previous year.

MARD is organising an international pepper conference from October 27-30 in HCMC with the participation of major pepper producing countries such as Vietnam, India, Indonesia, Malaysia, Brazil and other spice exporters from the U.S., the EU and Japan.-VNA