Pepper futures dropped from the high triggered by selling pressure at rise as we expected due to weak fundamentals. The reports that NCDEX accredited warehouses in Kerala were sealed due to inferior quality of pepper supported the downside. Market sources are waiting for the report from the FMC on this matter and prices are likely to get influenced on this matter in medium term. Weak export demand due to the premium prices in the international markets added downside support. The NCDEX Pepper February contract ended the session lower at Rs 3,4570, down by Rs 800 or 2.26% over the last close. 

Pepper arrivals increased to 350 quintals from 90 quintals and offtakes jumped to 370 quintals from 120 quintals. Black Pepper for ready delivery in Kochi, closed Monday's trading session on negative note with MG-1 at Rs 38,700, down by Rs 200 and Un-Garbled pepper at Rs 37,200, down by Rs 200 per 100 kg. 

Jakarta-based International Pepper Community's (IPC) estimates the total global production during 2013 at 3.17 lakh tonne and exportable surplus at 3.19 lakh tonnes respectively. International Pepper Community projected production and export estimates of pepper in 2012 would be around 324,000 mt and 249,000 mt respectively, as against 317,700 mt and 246,200 mt in 2011. Taking into account of stock brought forward from 2011, import and domestic consumption in 2012, around 85,750 mt would be carried forward as stocks for 2013. Local pepper is expected around 50-55 thousand tonnes in 2012-2013 against 43,000 tonne in 2011-12. Indonesian crop is projected higher. Pepper harvesting will begin in end week of December in Kerala's Idukki district, the main pepper producing areas and arrivals will begin in second week of January. Indian pepper in the international markets remains weak as huge price parity also pressurized prices. Local pepper crop is higher this year due to favorable weather. There is no pest or disease reported on pepper berries so far and harvesting is reported strong. Harvesting is reported strong in Kerala's Idukki district. Besides, short fall in Wayanad region in Kerala is likely to be compensated by bounty crop from Karnataka and Tamil Nadu. India exported nearly 15,700 mt during January - October 2012 as against 18,000 mt in January - October 2011, registering a decline of 13%. 

Pepper futures witnessed relief rally backed by strong winter season demand. The February contract witnessed selling above Rs 35000 per quintal and some support at Rs 33900-33200 level in the last one month. The contract slipped Rs 925 per quintal to the low of Rs 34445 level and settled at Rs 3,4570, down by Rs 800 or 2.26% over the last close. The open interest dipped 51 tonnes to 2,636 tonnes, indicating profit taking.

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