Last week was one of the most bullish in the price of black pepper from Vietnam and in the last 30 days, it has experienced about a 40% increase. Now, we are going to sum up the market situation.

Black pepper price has increased lately due to shortage of supply, said deputy Chairman of the Chu Se Pepper Association Hoang Phuoc Binh in the Central-Highlands Province of Gia Lai yesterday.
According to Mr. Binh, the price of black pepper is currently at VND70,000 (US$3.02) per kilogram, doubling that in April 2020. From May 2020 till now, the price of black pepper has surged due to a shortage of supply.

The current harvest is about 30% lower than the previous one. This by itself already causes an uptrend as there is less supply.

From 2017 till now, because of a slump in the price of the agricultural produce plus diseases and severe weather in 2020, farmers have not invested in pepper plantation anymore; pepper has not pollinated and the yield declined. Moreover, the land for growing pepper has shrunk. Therefore, a decrease in supply could already be foreseen.

In 2020 it went from low prices to arise throughout the year. In the first quarter, China was absent due to Covid-19. Therefore, the low prices in March 2020 can be attributed to this reason when most regions of the world were locked in.

In 2021 the normalization of demand combined with the decrease in supply is triggering prices. Farmers are aware that the harvest is poor and have seen price increases in the latter part of 2020.

Also, the harvest has been delayed. Therefore, strong resistance from farmers to reduce prices can be seen. They are holding the stock they have, speculating that they will be able to sell it even at higher prices in the future.

Will the markets calm down? As we are now seeing the entry of Chinese buyers, the markets may not have a break and we may see new highs. It is certainly possible for the markets to stabilize in June and July when Indonesia and Brazil are knocking on the door with their new crop, but this is not certain.