Domestic pepper prices to continue rising


White and black pepper from Sarawak Pepper, the brand name for Malaysia's pepper products

KUCHING: The price recovery in domestic pepper built up in the January to June 2023 period is expected to gather pace in the second half of 2023, predicts a leading local trader.

Nguong Aik (Kuching) Sdn Bhd director William S.C.Yii said it is likely that domestic pepper prices would continue their uptrend by another 10% from the current levels, adding “a 20% increase is possible” towards the end of the year.

Kuching Grade 1 black pepper’s price averaged RM14,000 per tonne on last Friday against RM12,900 per tonne at end-December 2022, an increase of RM1,100 per tonne or 8.5%, according to Malaysian Pepper Board’s daily published prices.

The price recovery for Kuching’s Grade 1 white pepper is, however, less significant. During the same period, white pepper gained RM600 per tonne to RM23,500 from RM22,900 per tonne.

In 2022, black pepper fared poorly, plunging RM4,430 per tonne or 25% from RM17,330 per tonne in 2021. Year-on-year, white pepper lost RM3,550 per tonne of 13.5% from RM26,430 per tonne.

At its peak, black and white pepper hit RM30,000 and RM50,000 per tonne respectively about eight years ago.

Yii said many traders, including those in Malaysia and Vietnam (worlds’ top pepper producer and exporter), have earlier predicted a robust pepper market in 2023 but based on the current market trend, they might be too bullish.

“At the beginning of the year, pepper prices have gone up quite a bit because of the re-opening of the borders (as the Covid pandemic started to ease).

“After China reopened its borders, pepper prices shot up as a result of the demand because for two years during the pandemic, China had not imported pepper.

“The prices, however, started to come down after the Lunar New Year celebrations.

“For other major pepper markets after the pandemic, major importers in pepper consuming countries (have changed their strategies) only buying hand-to-mouth instead of keeping large stocks of between 200 to 300 tonnes before. This has slowed down the demand,” he told StarBiz.

The strong US dollar and inflation are among the factors affecting pepper consumption.

Nguong Aik is Sarawak’s leading pepper exporter.

Vietnam’s General Department of Customs has reported that the country exported 131,500 tonnes of pepper worth US$406.5mil (RM1.85bil) in the first five months of 2023, which was a decrease of 11.6% in quantity and 33.2% in value as compared to the same period in 2022.

The average export price of the spice called “Vietnam’s black gold” was down by 33.2% to US$3,092 (RM14,069) per tonne during the same period.

In 2022, Vietnam exported 220,000 tonnes, accounting for 55% of the total pepper output in the globe.

The reason given for the sharp drop in export was that speculators reserved money to buy Robusta coffee as cocoa bean’s prices have surged.

Yii said due to weak pepper prices and the rising costs in pepper planting, some Vietnamese pepper farmers were reported to have switched to cultivating other crops,like durian.

He said Sarawak pepper market has stayed rather stable and quiet this year, with unprocessed black pepper trading between RM13.5 and RM16 per kilo while the white pepper trading between RM22.5 and RM26 per kg.

Sarawak has just completed its new crop’s harvesting, and Yii said the total production volume was similar to 2022, and not encouraging.

International Pepper Community (IPC) executive director Firna Azura Ekaputri Marzuki said global oversupply had put pressure on pepper prices in the past several years.

“Following the peak of pepper price in 2015 and 2016, the global pepper production has continuously reported a steady increasing trend which has caused the scale to greatly tip to one side.

“On average, in the past five years,the global pepper production has exceeded 500,000 tonne while the excess stock brought over balance for a five-year calculation (2017-2033) averaging around 175,000 tonnes.

“As a result of the global oversupply of pepper, pepper price has fluctuated with a tendency of decreasing and has prolonged the unfavourable low prices of pepper,” she added in a message to the international pepper community family.

Firna said the imbalance of global pepper supply and demand has put pressure on the economy of the stakeholder of the pepper industry, especially smallholders as they are burdened with a significant high cost of production and relatively low selling prices.

In this regard, she said the need for increasing the global demand for pepper has been of great importance and ought to be seriously taken up by all stakeholders of the pepper community by encouraging more promotional campaigns.

These promotional activities would help to increase pepper consumption both domestically and internationally as well as penetrating more unconventional consuming markets to expand the market.

She said such efforts would help create more opportunities for the advancement and sustainability of the global pepper industry.

Malaysia, the current IPC chair and which is among the top five pepper producer in the world, will host IPC’s 51st annual session and meetings and International Spice Exhibition in Kuching from Nov 6-9 this year.

Firna said the IPC’s 51st annual session has thus chosen “Balancing the global pepper supply and demand – alleviating pressure on prices” as its theme.

The annual session and exhibition will be jointly hosted by the Plantation and Commodities Ministry, Malaysian Pepper Board and IPC.

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