Pepper prices have changed continuously in a very short time and do not follow the “old” rule, which has caused a lot of “headaches” for exporters.
In the past week, domestic pepper prices have continuously increased and decreased. Immediately after a hot increase to 205,000 VND/kg, which is considered a peak in the past 8 years, domestic pepper prices then decreased sharply in a short time. This not only makes traders and farmers “headache” with the question of selling or stockpiling but also causes many export enterprises to be more worried and cautious in their decisions.
According to the Vietnam Pepper and Spice Association (VPSA), exports to China recovered strongly in May with 3,137 tons. It was up 381.9% compared to April, but down 69.4% compared to the same period last year. In total, in the first 5 months of the year, pepper exports to China reached only 4,871 tons, down 89.4% over the same period in 2023.
Explaining the reason, the VPSA said that due to the lack of goods for export, businesses increased their purchases in a short time, pushing up prices.
Experts and agents said that the current “hot” momentum partly comes from Chinese traders since they have started to buy pepper again after a long time. Meanwhile, the amount of pepper brought into the market by businesses and speculators during the peak time may be one of the reasons for the price decline.
Domestic pepper prices have suddenly increased and decreased.
Many experts and exporters said that the rule on pepper prices this year is not the same as in previous years. Looking back at the history of the pepper market, which has undergone many price up and down cycles, the price upcycle of pepper usually lasts from 8 to 10 years, and it is forecast that the price will reach its peak and will be higher than that of the previous cycle. They said that the supply shortage this time is because Vietnam, a country that provides about 50% of the global market, has ended the pepper crop since March, while the pepper crop in Brazil has not come yet. The main crops in Indonesia and Malaysia are around July. Lower supply than demand is the reason why the upward price trend takes place in all markets, not only in Vietnam.
According to the Ministry of Industry and Trade, the sudden increase and decrease in prices is a result of “overheating” speculation. At the same time, the high price of pepper can trigger growers and agents to sell all inventories of other crops to the market. Moreover, currently, with the increase in prices on the world market, domestic pepper prices are still lower, so many retail agents are taking advantage of this opportunity to keep goods and push prices up.
Industry experts assessed that the downward price adjustment is essential to “balance” the market. However, the price is unlikely to drop deeply as it has entered a new price upcycle in the context of low global supply but rising demand.
According to the VPSA, Vietnam’s pepper industry accounts for 40% of production and 60% of the world market share. It is estimated that Vietnam’s pepper production in 2024 will only reach 160,000–170,000 tons, a sharp decrease compared to the previous year. Global pepper production this year is expected to reach about 465,000 tons, down 1.2% from 2023. /.