Pepper commodity at all-time high on bullish demand

KUCHING: Pepper prices are on fire, rising to a new all-time high despite new supplies flooding the market since harvesting began in May.

With global demand continuing to outstrip supply in the coming years, the industry expects prices to remain high for the foreseeable future.

Year-to-date, the price of Kuching Grade 1 white pepper had risen RM5,400 per tonne or nearly 19% to RM34,400 a tonne yesterday, while the price of black pepper has added RM5,550 per tonne or 28% to RM25,150 a tonne.

The white and black pepper finished at RM29,000 per tonne and RM19,600 per tonne respectively last year.

According to Malaysian Pepper Board, the current year production is expected to top 27,000 tonnes.

“It is unexpected that the prices have gone up so much.The current prices are already very high and we are not sure how far they can go,” Malaysian Pepper Board (MPB) director-general Datuk Grunsin Ayom told StarBiz yesterday.

Some local dealers had anticipated prices to soften as the new crop (harvesting started in May) flooded the market that would alleviate the prolonged tight supply situation.

Grunsin said this was not the case as the new crop was coming to the market on a controlled pace.

“Fundamentally, the market is still very strong.”

He said the price uptrend was not a local but global phenomenon due to the supply shortfall as consumption had far exceeded production for years.

“In the 1980’s,the global consumption was around 120,000 tonnes a year,and this has now tripled.”

Based on International Pepper Community (IPC) 2014 forecast, this year’s global consumption would hit 387,000 tonnes against production of 333,500 tonnes,resulting in a shortfall of 53,500 tonnes.

IPC figures shiown that global pepper consumption grew at an average of 4.8% per annum (2001-2013) as compared to a mere 0.3% increase in average production per annum during the same period.

Grunsin recalled that the last time white pepper hit RM30,000 a tonne was in the 1990’s.

“The current pepper market is very transparent. Farmers are better informed of market trend and price movements, and they are in a better position to determine when to sell their stocks (to get the best price),” he added.

Grunsin said Malaysia was projected to produce between 27,000 tonnes and 27,500 tonnes this year,and that between 70% and 80% of the new crop had been harvested.

Sarawak contributes more than 95% of the country’s production while Johor and Sabah are the other producing states.