W10 Black Pepper Update: Vietnam's Black Pepper Prices Surged Amidst Global Market Stability, Farmers Anticipate Further Increases

Farmers Stockpile Black Pepper as Prices Rose in Vietnam

In early 2024, black pepper prices in Vietnam rose by 12.6% year over year (YoY). Farmers and factories are skeptical about coffee prices increasing by USD 400 per metric ton (mt) in 2024, but they anticipate black pepper prices rising by USD 1,000 to 1,500/mt soon. As a result, farmers focus on selling coffee and storing black pepper, decreasing the amount of black pepper traded compared to previous years. On social media, there is a growing expectation that black pepper prices will increase by at least 20 to 30% soon. This belief has strengthened the trend of stockpiling black pepper among farmers, who increasingly trust in the rising price trend and are reluctant to sell when the market adjusts downward.

Global Pepper Market Shows Stability Amidst Regional Fluctuations

On March 4, the global pepper market remained stable in several countries, with Lampung black pepper in Indonesia priced at USD 3,896/mt. Malaysia's Kuching ASTA black pepper maintained stability at USD 4,900/mt, while in Brazil, the ASTA 570black pepper price was USD 3,270/mt. Vietnam's export prices for black pepper grades 500 and 550 grams per litrel remained at USD 3,900/mt and USD 4,000/mt, respectively. Domestically in Vietnam, pepper prices ranged from USD 3.77 to 3.87 per kilogram (kg), with experts foreseeing potential increases to over USD 4.05/kg due to anticipated declines in global and Vietnamese pepper production, coupled with farmers holding back pepper stocks, contributing to scarcity and higher prices.

On March 8, the global pepper market saw continued increases in Indonesia while remaining stable in other countries. Lampung black pepper in Indonesia rose by 0.4% to USD 3,978/mt. Malaysia's pepper prices held steady, with Kuching ASTA black pepper at USD 4,900/mt. In Brazil, ASTA 570 black pepper maintained its price at USD 4,350/mt. Vietnamese export prices for black pepper grades 500 and 550 g/l remained unchanged at USD 4,100 and USD 4,200/mt.

The International Pepper Community (IPC) forecasts a global pepper production decrease of 1.1% YoY in 2024, with Brazil and India increasing production while Vietnam decreases. Meanwhile, domestically, the pepper market on March 8 saw sharp decreases compared to the previous day. Prices in Đắk Lắk and Đắk Nông dropped by USD 0.040/kg to USD 3.85D/kg, while Gia Lai saw a slight decrease to USD 3.75/kg. In Đồng Nai, prices decreased by USD 0.020/kg to USD 3.75/kg, and in Bà Rịa–Vũng Tàu, prices fell by USD 0.061D/kg to USD 3.81/kg. Traders in Bình Phước also saw a decrease, trading at USD 3.83/kg, down by USD 0.040/kg.

Vietnam's Pepper Exports Declined 12.3% YoY in Early 2024

In the first two months of 2024, Vietnam's pepper exports totaled 35 thousand mt, marking a 12.3% YoY decrease, but export value surged by 12.9% YoY to USD 143 million, as reported by Vietnam's Ministry of Agriculture and Rural Development. The United States (US) is Vietnam's largest pepper export market, constituting 29% of total exports, followed by India at 8% and Germany at 6%. During this period, the average export price of Vietnamese pepper reached USD 4,041/mt, reflecting a significant 28.7% YoY increase, consequently driving up domestic pepper prices. The pepper price increase is due to supply and demand dynamics, with domestic speculators anticipating a multi-year price increase cycle and purchasing large quantities accordingly. Moreover, increased demand from markets such as China, the US, the European Union (EU), Asia, and Africa is anticipated in Q1-24. The Vietnam Pepper and Spices Association forecasts a 10% to 15% YoY decrease in Vietnam's pepper production in 2024, estimating it to range between 160 and 170 thousand mt.