The world is awash in pepper, prices are uninspiring and now, to the dismay of the market, Vietnam has begun marketing its new crop. The world's largest producer of black pepper, Vietnam is expected to harvest 100,000 tonnes of the spice in 2005, unchanged from last year, but well above 73,200 tonnes in 2003, according to the Vietnam Pepper Association.
"I don't see much prospect for prices to rise in the next three months. I don't think Vietnam will hold back stocks because there's so much of pepper around," said one trader in Kuching, capital of Malaysia's pepper state on Borneo island.
Vietnam is often been blamed for a glut in the global pepper market, which traders say will see a surplus of around 80,000 tonnes of black and white varieties this year. The harvest started in Vietnam in February and normally lasts through June.
Vietnam, also the world's largest producer of robusta coffee, has more than 52,500 hectares (129,727 acres) of pepper under plantation, 70 percent of which are productive.
Dealers said there were rumours the country's production may only reach 85,000 tonnes this year because of a severe drought but that would barely affect the price, which has been steady in the last few months ahead of Vietnam's harvest.
Black pepper was offered at $1,600 a tonne, free on board, in Kuching, while higher quality white pepper was quoted at $2,300 a tonne, dealers said. Malaysia, the world's fifth-largest pepper producer, may see output unchanged at around 20,000 tonnes this year because of heavy rains that hurt growth on the pepper vines.
The next harvest will start in April. "At current prices, black pepper farmers can cover their costs. But still, the price is far being from attractive and we start to feel the presence of the Vietnamese's crop," said the dealer in Kuching.
In Indonesia, the world's third-largest producer, dealers waited for the next harvest to start in June in the main growing island of Sumatra. There were rumours output would fall by 40 percent this year because of dry weather.
Indonesia produced 55,000 tonnes of pepper in 2004, according to the International Pepper Community. "It's rather dry here and we will have to see whether this kind of weather will carry on until the harvest. It looks like the crop will go down sharply," said one dealer in Jakarta.
"Decline in production won't help the price because there's quite a significant amount of supply. The crop from Vietnam has started to emerge in the market but we haven't seen much impact on the price yet," he said.
Dealers said some pepper from Indonesia and Brazil, another main producer, was still available for sale.
Black pepper was unchanged at $1,390 a tonne, free on board, in Lampung in south Sumatra. White pepper was steady at around $2,320 a tonne, free on board, in Muntok on the island of Bangka off Sumatra.