Rising supplies of pepper from Vietnam, the world's top exporter, are pressuring prices in Asia despite the prospect of lower output in Indonesia and Malaysia, traders said on Friday.
Vietnam's pepper exports are projected to rise by 9.3 percent this year to 82,000 tonnes, according to the Vietnam Pepper Association (VPA). It is forecast to produce 90,000 tonnes.
"Vietnam has exported around 40,000 tonnes of its pepper this year, which means more than half its stocks are yet to be sold," said one trader in Jakarta.
"Buyers are aware of this and are waiting for prices to come down. The market is so lethargic," he said.
Vietnam, the world's top black pepper grower, produced 85,000 tonnes of pepper last year, according to the Jakarta-based International Pepper Community (IPC).
Traders said the harvesting season ended in Vietnam, but was still going on in Indonesia and Malaysia, the world's second- and fifth-largest producers.
The harvest in Indonesia's main growing island of Sumatra was delayed by a month to July due to bad weather and was expected to last through August.
Indonesia's white pepper prices were unchanged at $2,415 a tonne FOB Muntok, while black pepper was flat at $1,390 a tonne FOB Lampung due to a lack of buying interest.
The IPC, which group's producers and consumers, puts Indonesia's output at 67,000 tonnes in 2003 and Malaysia's at 22,000 tonnes.
This year's output in both countries was expected to fall due to heavy rains. "Production will be down this year by around 40 percent," said the Jakarta trader. "I don't think this will have much impact on prices because people know Vietnam has stocks," he said.
Some traders said farmers in Vietnam seemed desperate to sell their crop because of fears prices may fall further. Traders in Malaysia also complained of poor demand. Ex-farmer black pepper was flat at $1.13 a kg in Malaysia's main growing state of Sawara on Borneo. White pepper was on offer at about $2 a kg, little changed from last week.
"The harvest is still underway in some areas but I think output is not going to be good. It has rained too much, which caused flowers to fall from the trees," said one trader in Sawara's growing region of Seiren.
"This year's production may fall by around 15 percent. But prices are depressed, probably because there are so much stocks in the market," he said. The harvest in Sawara started in March and is expected to end in August.