Pepper August contract dropped Rs 690 and settled at Rs 42675/quintal on profit booking by the traders though limited stocks along with firm domestic demand could limit the downtrend. Weak overseas sales due to high-priced Indian produce in the global market also supported selling at higher prices. Fresh arrivals from Indonesia and Malaysia are expected to gain pace by mid-July and this is weighing on sentiment. Reports that farmers in Vietnam are willing to hold their produce expecting higher prices may limit the downtrend of Pepper futures. Domestic consumption of Pepper in the world is expected to grow by 3.03% to 1.25 lakh tonnes while exports are likely to grow by 1.48% to 2.46 lakh tonnes in 2012. According to Spices Board of India, exports of pepper during April 2011-March 2012 rose by 42% and stood at 26,700 tonnes as compared to 18,850 tonnes in corresponding period last year. In Kerala and Karnataka, the leading pepper producing states in the country, the crop is harvested from December to February. As per IPC latest estimates, global Pepper production expected to rise to 3,20,000 tonnes in 2012 vs 2,98,000 tonnes this year - a rise of 7.2%. Spot pepper gained 212.15 rupees to 41305 rupees per 100 kg in Kochi market. The contract touched the intra day high of Rs 43490/quintal while low of Rs 42625/quintal. Now support for the pepper is seen at 42370 and below could see a test of 42065. Resistance is now likely to be seen at 43235, a move above could see prices testing 43795.

Trading Ideas:

Pepper trading range for the day is 42065-43795.

Pepper declined on profit booking though limited stocks along with firm domestic demand could limit the downtrend.

Weak overseas sales due to high-priced Indian produce in the global market also supported selling at higher prices.

NCDEX accredited warehouses pepper stocks gained by 24 tonnes to 1560 tonnes.

Spot pepper gained 212.15 rupees to 41305 rupees per 100 kg in Kochi market.