Global pepper market adversely affected by Coronavirus

Global pepper market is witnessing a grim scenario with no demand seen in the past two weeks as the coronavirus outbreak impacts its prices in Europe and the US. As it is the demand has fallen by 6-8 per cent in 2020. This could fall further with COVID-19 as it spreads to key markets of the US and Europe.

There is an extreme fear in the market and regular buyers are in the wait and watch mode. Suppliers of spices in the US market fear a drop in demand if the disease spreads to more cities and people. Prices could drop further if the situation continues like this.

According to exporters, Vietnam was offering American Spice Trade Association (ASTA) grade pepper for $1,950 per tonne, while Brazil and Indonesia are quoting lower than that. However, Rajiv Palicha of Nedspice India told Financial Express that there was not much disruption in pepper trade except in container movements slowing down due to problems in China. 

“Prices of all spices have declined 8-10 per cent and arrival of the new crop in pepper has added to the pressure. There is a slight slowdown in demand from China and Italy but overall, the trade has not seen big disruptions,” he added.

Pepper Crop Report by Nedspice in January 2020 reported that new crop arrivals were expected to peak between February and April putting further pressure on pepper prices over the upcoming months. The report added global production was estimated to drop by 12 per cent this season, but the overall stocks were expected to be still well above the total market demand.

India is the largest consumer of pepper in the world and the second largest producer after Vietnam. Traders believe that a revival in Chinese demand could help support pepper prices to a certain extent in the short run.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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