Starting Off 2024: Black Pepper Prices in Vietnam and Brazil Are Rising

Whole Black Peppercorn

Brazil

Vietnam

Market & Price Trends

Published Jan 19, 2024

As of the second week of 2024, the black pepper market in Vietnam is experiencing a notable price surge, witnessing a 5% WoW and 15% MoM increase, reaching USD 3,900/mt. Worries about the current season's supply scarcity, influenced by low crop productivity and reduced interest rates, have contributed to a decline in the domestic pepper supply. The upcoming harvest is expected to yield substantially less, sustaining high prices. Similarly, in Brazil, black pepper prices remain elevated at USD 3,270/mt in W2 2024, primarily due to poor production caused by adverse weather conditions, specifically drought attributed to El Niño. The severity of supply scarcity is evident in significant crop failures and limited production, raising concerns about upcoming harvests and presenting persistent challenges in supply chains throughout H1-24. The apprehension about depleted reserves and supply shortages from major producing countries has led to increased purchases by importers, anticipating heightened competition that could potentially drive world black pepper prices.

Weekly Price of Black Pepper in Vietnam and Brazil (USD/mt)

Vietnam’s Black Pepper

The price of black pepper grade 500 gram/liter (g/l) in Vietnam witnessed an increase of 5% week-on-week (WoW) and 15% month-on-month (MoM), reaching USD 3,900 per metric ton (mt) in W2 of 2024. This upturn is linked to concerns about the current season's supply scarcity. The domestic pepper supply is dwindling due to low crop productivity and reduced crop interest rates, with current inventories estimated at 6,000 to 10,000 mt. The upcoming harvest is anticipated to yield only 140,000 to 150,000 mt, marking a substantial 10 to 15% decrease from previous years. Many pepper farmers have shifted to cultivating alternative crops like coffee and durian for more consistent and higher income.

Vietnam's black pepper is experiencing a significant withdrawal ahead of the Tết holiday before the impending new harvest. Local factories are acquiring goods in moderation to assess the output post-Tết holidays. Tết holidays in Vietnam span from February 8 to February 14, with factories expected to close around February 2 to 3 and resume operations around February 19. After Tet, pepper farmers in provinces like Đăk Nông, Đắk Lắk, and Gia Lai enter the harvest season lasting until Apr-24.

Despite the supply being "suppressed" before the new harvest, scarcity concerns persist and a significant increase in pepper prices is expected. Tridge’s correspondent in Vietnam estimates that pepper prices will sharply rise, potentially reaching VND 100,000 per kilogram (kg) after the Tết holidays and the new harvest season.

Driven by concerns about depleted reserves and supply shortages from major producing countries has resulted in heightened purchases by importers. According to the International Pepper Community (IPC), this trend is anticipated to trigger buying competition, potentially propelling world pepper prices. In Vietnam, the price increase is expected to reach levels similar in 2021 in Figure 1.

Figure 1. The Price of Vietnam Black Pepper 500 g/l

Brazil’s Black Pepper

The same trend occurred in the price of Brazil black pepper ASTA 570, which remained high at USD 3,270/mt in W2 of 2024. The price has continued on a high level from Dec-23 due to poor black pepper production.

Adverse weather conditions, primarily drought attributed to El Niño, have ravaged growing key producing regions, notably Pará, leading to substantial crop failures and lesser production. The production is estimated to decrease by 15% year-on-year (YoY) to 100 thousand mt. The severity of supply scarcity is evident in reports of extreme temperatures surpassing the tolerance limit of pepper plants and causing them to wither.

Intensified heatwaves in the Pará region further worsened the scarcity due to farmers' reluctance to sell their remaining stock amid the severe drought. Suppliers are deeply concerned about production, especially given the looming impact on subsequent years' yields and the current limited crop at year-end.

Ongoing concerns loom regarding production as the drought exacerbates fears of substantial plant failures impacting upcoming harvests. The dire situation in the Amazonas region, notably the dried-up port of Manaus, compounds shipment challenges, potentially escalating delays and cancellations for exporters. Tridge expects that the price of Brazilian black pepper will be elevated throughout H1-24, hinting at persistent challenges in supply chains and an impending production crisis.