PEPPER The Way Ahead'' GIBY MATHEW Managing Director JRG Wealth Management Ltd, Cochin'

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PEPPER The Way Ahead..GIBY MATHEWManaging
DirectorJRG Wealth Management Ltd, Cochin.
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INTRODUCTION

• Pepper the King of Spices
• Distributed all over the world
• Pepper is a berry of Piper Nigrum, a perennial
  shrub.
• Also called Black Gold due to its durability
  and value.

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Characteristics of Pepper Plant

• The pepper plant requires a long rainy season,
  fairly high temperatures, and partial shade for
  the best growth.
• They begin bearing in 2 to 5 years and may
  produce for as long as 40 years

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INTRODUCTION

• Major Producers
• Vietnam (85,000 MT)
• Indonesia (67,000 MT)
• India (65,000 MT)
• Brazil (35,000 MT)
• Malaysia (22,000 MT)
• Malabar Grade of pepper from India traded at
  Kochi, Kerala is considered to be the premium
  grade of pepper, and it rules above the
  international grades.

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Pepper - Major Uses

• Domestic Uses
• Culinary usage (as a spice)
• As a preservative
• Industrial Uses
• Oleoresin industry (Extracting oil from pepper)
• Pharmaceutical industry

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International Grades of Pepper

• Grades - Mainly based on the name of place
• Malabar Garbled (MG1) India
• Lampung Panjang , Indonesia
• Sarawak Kuching , Malaysia
• Vietnam - HCM City ,Vietnam

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Futures Trading in Pepper

• Worlds oldest Pepper Exchange IPSTA has been
  functioning in futures trading in pepper since
  1957.
• Major National level Exchanges India
• National Multi Commodity Exchange (NMCE) started
  on 26-Nov-2002
• National Commodity and Derivative Exchange
  (NCDEX) started on 15-Dec-2003

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Benefits of Futures Trading in Pepper

• Benefits of futures trading would include
• Better price discovery
• Hedging
• International price knowledge
• Seasonal and off-seasonal production forecast.
• Easy and transparent delivery system.

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Benefits of Futures Trading

• Parallel movement of spot and future rates is
  beneficial for all kind of traders.

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Production around the Globe
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Production around the Globe

• The global production of pepper fluctuates
  between 3-3.5 lakh MT, with a production of 2.9
  lakh MT recorded in 2005.
• After increasing for continuous years till 2003,
  pepper production has remained relatively steady
  in the subsequent years (2004 05), and the
  estimated production for 2006 is still lower.

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Production Distribution around the Globe

• Supply of pepper has seen a dramatic increase
  over the last ten years (except the current
  year).
• Vietnams sudden increase in production has
  resulted in the global production, increasing to
  3-3.5 lakh MT from 1.9-2 lakh MT in the late
  nineties. (due to Agricultural Technical
  support from Govt.)
• Vietnam is the worlds largest producer and
  exporter of pepper in the world now.

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Production Indian Scenario

• Considering the Indian scenario, the average
  yearly production for the 5 years (2001 05)
  has been slightly higher compared to the previous
  5 years (1996 2000).
• Production of pepper in India has declined in the
  recent years. Its production was 62,000 MT in
  2004 against 65,000 MT in 2003 and 80,000 MT in
  2002.
• This recent declining trend is not a healthy
  indication of the pepper output from India, who
  has been getting premium rates for its pepper.

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India in Pepper Industry

• USA, Canada, Japan and Gulf countries are the
  favoured destination for Indian pepper.

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Vietnam The Key Driver of Pepper Market
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Impact of Vietnam Production

• The continuously Increasing production tendency
  in Vietnam from 1999 till 2005 pushed down the
  world pepper prices compared to the years just
  before.

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Reasons for the Recent Uptrend in Pepper

• According to IPC (International Pepper Community)
  world pepper production is estimated to be 15 -
  20 lower in 2006.
• In producing countries except Vietnam, pepper
  production for 2006 is estimated to be lower.
• Most of the countries have sold out their current
  year output Vietnam has sold about 60 of this
  years production leaving 25,000 MT in the
  reserve.
• Reasons for Recent Fall in Production
• - Lower prices during last few years
  discouraged farmers from spending more for taking
  care of their pepper vines.
• - Past lower prices and high input cost
  prompted many farmers to switch to other more
  profitable commodities.
• - Diseased vines.
• - Adverse climatic conditions in some of the
  growing countries.
• - Declining Carry-over Stock

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Harvesting Season of Pepper
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CONCLUSION

• Harvesting Season in almost all the major
  producing countries is over.
• Season in India, Sri Lanka and Thailand are
  approaching.
• Further rate movements would depend on the rate
  of Indian parity, being the premium grade.

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CONCLUSION

• According to IPC (International Pepper
  Community) world pepper production is estimated
  to be 15 - 20 lower in 2006.
• World pepper production for 2006 is projected to
  be 2.65 lakh MT, against the estimated production
  of 2.9 lakh for 2005.
• According to IPC studies, world pepper
  consumption is growing at a rate of 3.46 per
  annum.
• The US remains the single largest importer of
  pepper, with a share of 23 of the world market.
  
• US imports have shown an annual growth of 5.46
  during the last few years.

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CONCLUSION

• Expecting trading in the range 2600 - 3300 in
  the near future.
• Further rate movements beyond the range can be
  expected according to higher rate offering from
  India, since the Indian season is approaching.

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THANKS..