Vietnamese black pepper bids hold firm amid lower output

Whole Black Peppercorn

Vietnam

Market & Price Trends

Published Mar 21, 2022

Vietnamese black pepper market is getting hot. Export and domestic prices have surged by 26% over the past season, reaching USD4,200/MT FOB in W11 2022. The support to the values came from tight supplies, as local black pepper production is down 25% YoY. At the same time, the global demand for the local spice remained strong, with the value of exports surging by 44% YoY to USD950 million.

Over the past year, the upward price trend has prevailed in the Vietnamese black peppercorn market. The most significant jumps were seen in March, May, and October last year as supplies were getting tighter in the domestic market. In mid-February 2022, prices began to ease slightly as the new crop harvest season arrived. Domestic demand was also sluggish, with some importers taking a waiting stance to estimate the market supply. Local exporters quoted black peppercorn (550g/l) at USD4,200/mt FOB Vietnam in W3 March 2022, down USD100/mt compared to W3 February 2022. However, this figure is still 26% higher than in the same period last year.

Source:International Pepper Community

Given influential bullish factors, Vietnamese export prices for the mentioned spice will increase in 2022. As new-crop harvesting is gaining momentum in the country, market players are reducing their estimates of the 2022-crop. The most substantial reasons behind the pessimistic sentiment are the lack of labor available for harvesting caused by COVID-19, a reduction in the acreage, and delay in harvesting. In 2021, black pepper production totaled 180,000 mt, down 25% YoY. The new crop is projected to fall by 10,000 mt YoY to 170,000 mt.

Additional price support comes from the gloomy prospects of black peppercorn crops in the other significant producing countries. Indonesia’s and India’s 2022 harvests are pegged at 50,000 mt and 60,000, down 10,000 mt from the 2021 level for each country. Climate change, which causes uneven distribution of rainfall and higher dryness, is the main reason for reducing production. The crop outlook looks optimistic only for Brazil, the world’s second-largest producer of black pepper, with the harvest projections at 105,000 mt in 2022, up 10% YoY.

At the same time, global demand for black peppercorns remains firm, which also adds up to the increase in prices in Vietnam. Despite lockdowns all over the world, global black pepper consumption reached 506,000 mt in 2021, 5% more than in 2020. This year, the consumption of this spice is forecast at 526,000 mt. Vietnamese exporters are upbeat about the black pepper exports in 2022, as higher use will be driven by the opening of economies in the main consuming countries, especially the USA, the leading importer of Vietnamese black pepper.