Friday June 15 2012
EUROPEAN spice dealers have viewed recent figures on pepper exports from Vietnam as a clear indication that overall demand for the spice is holding up well, despite the cautious buying pattern in eurozone countries.
It has often been suggested that although importers in Europe and elsewhere have maintained a hand to mouth buying approach over the last few years of economic downturn, overall consumption of pepper has been relatively constant. This has been supported in part by export figures.
For example, in May alone, Vietnam was said to have sold some 14,000 tonnes of pepper to global destinations and its total exports between January and May reached an estimated 62,000 tonnes.
One Rotterdam trader said that the total for Vietnam’s shipments to date confirmed his view that world availability of pepper this year would be less than in 2011. “It also shows that each and every month sufficient quantities are being ordered just to cover demand here but at the same time also to keep markets almost stable,” he said.
The trader noted that local prices in Vietnam had hardly moved over the last four to six weeks, despite talk of sluggish demand. “Apparently, the market is structured in such a way that there is enough demand to keep prices high and there is not too much supply for the market to come down,” he said.
Kai Jantzen of Hamburg trader Jantzen & Deeke told The Public Ledger that the volume of Vietnam pepper exports could lead to two varying perspectives on the market. “From the supply side there is definitely not that much selling pressure anymore because 50% or so of the (Vietnamese) crop has been shipped and we still have eight months to go until the next crop. But if you look to the demand side then these 60,000 tonnes must be somewhere. They are not consumed yet, meaning they are either with traders or speculators or even with industry as bumper stock. That of course is hanging over all of us, but nobody really knows which of the two conclusions is the more important one,” he remarked.
Mr Jantzen felt it likely that there was coverage for the nearby. “But I also suspect that Europe and the US must come in to buy for the second half of the year. They are not covered simply because of the pessimistic outlook which means nobody really buys or covers for the long term, only for the mid or short term. That is exactly the big question mark: who will move first? The buyers or the sellers?” he added.
Other factors to bear in mind were that Malaysia had not been particularly aggressive in marketing this year, while new crops were imminent from Brazil and Indonesia. Mr Jantzen suggested that the arrival of these crops and holiday season in Europe should help take some of the heat out of the market.
The Rotterdam trader added that he was anticipating a pepper shortage to arise in the third or fourth quarter of this year. Asked about the current state of demand, he remarked: “I still feel that the market is quite healthy and quite strong.”