World pepper output likely to drop in 2008

Demand-supply gap seen at 55,000 tonnes

Kochi, Nov. 5 World pepper production is projected to be lower in 2008 at 2,62,400 tonnes as against 2,72,040 tonnes in 2007 and 2,89,230 tonnes in 2006 following weak crop in India, Brazil, Indonesia and Vietnam.

According to the International Pepper Community, there could also be a fall in the carry forward stock which is projected at 61,719 tonnes in 2008 as against 73,404 tonnes in 2007 and 88,384 tonnes the previous year.

Total exports during the current year is estimated at 2,01,700 tonnes as against 2,45,741 tonnes last year while the projection for 2008 has been put at 1,90,800 tonnes. It is against an estimated demand of 2,45,000 tonnes and hence, there could be a gap of around 55,000
tonnes between demand and supply next year.

Though the Indian production has been projected at 50,000 tonnes by the IPC, according to farmer groups it is likely to be around 45,000 tonnes. They attributed the decline to continuous rains in the Madikeri region of Karnataka resulting in severe berry drop. A major planter and agriculture scientist, Dr Jacob Thomas, told Business Line on Thursday that he anticipated a decline of 20-30 per cent in output of the current crop which is expected to be harvested in
December.

He said there were very few pure pepper plantations. Pepper is mainly grown as an intercrop in the coffee estates. Therefore, it is under tree shades without any chances of getting sun light. "The berry drop in these plantations has been severe," he said. However, he ruled out delay in harvesting given the current favourable weather conditions as the berries require sunlight for a fortnight for maturing.

Karnataka normally produces 20,000 – 22,000 tonnes of black pepper annually and because of the berry drop it is likely to be in the range of 15,000 – 16,500 tonnes.

According to farmer sources in Kerala's Wayanad and Idukki districts, the main growing areas in the State, there could be marginal decline because of heavy rains this year. Output in Kerala, they claimed, could be around 25,000 tonnes, while the Tamil Nadu production is estimated at 5,000 tonnes. Thus, the total output of the current crop might hover around 46,500 tonnes, they claimed.

Besides, according to Dr Jacob Thomas, there could be an estimated stock of 4,000 tonnes in Karnataka as the major growers are holding back their produce anticipating the prices to cross Rs 150 a kg in November. "There won't be a distress sale this year because of good coffee prices apart from writing off of coffee loans by the Karnataka Government," he said.

Trading sources estimates put the output for 2008 at 40,000–45, 000 tonnes while the IPC estimates placed it at this year's level of 50,000 tonnes.

The domestic consumption in India for the current year is estimated at 55,000 tonnes while for 2008 it has shown a drop of 10,000 tonnes to 45,000 tonnes, probably anticipating an increase in prices and consequent consumer resistance.

According to market sources, the current situation is favourable for more imports of pepper. Availability of lower grade pepper in other origins at low prices as against high domestic price due to tight supply, appreciation of rupee against dollar and availability of overseas advances at low rates of interest have placed importers in the country at advantageous position, they said.

In the world scenario, Brazilian output in 2008 is projected at 33,000 tonnes as against 36,000 tonnes in 2007 while Indonesian production is at 20,000 tonnes compared to 25,000 tonnes this year.

Vietnam production is also projected to be less by 10,000 tonnes at 80,000 tonnes from 90,000 tonnes in 2007. In 2006 Vietnam produced one-lakh tonne of pepper.

However, Malaysian production is likely to be at 23,000 tonnes as against 20,000 tonnes this year while that of Sri Lanka is projected to be marginally up at 14,900 tonnes compared to 14,640 in 2007.

Courtsey:Business Line

Why Silver is a better investment than Gold?

Silver has all the same monetary properties of gold, and more!

The historic price ratio of silver to gold shows that about 10 ounce of silver would buy one ounce of gold, a 10:1 ratio. Recently, the ratio is about a 50:1 ratio (with silver at $13/oz., and gold at $650/oz.) As the silver to gold ratio returns to historic values, from 50:1 to 10:1, you may make over 5 times more money investing in silver, than gold!

Silver prices may rise to exceed the 10:1 ratio, for the following reasons:

More than all of the silver produced by the mines each year is consumed by industry, which leaves little to no room for substantial investment demand. The tiniest bit of investment demand will drive prices sky high.

Supply prices aren't going anywhere. Higher prices in silver may not cause increased supply (production). Why not? Because most silver is produced as a by-product of mining gold, copper, zinc, or lead. Thus, higher silver prices will not substantially increase the amount of silver mined each year. In 1980, when silver prices went up to $50/oz., less silver was mined than in 1979!

Demand prices aren't going anywhere either. Higher prices may not cause reduced demand (consumption). Why not? Because most silver consumed by industry is used in such tiny quantities in each application, such as in film or electrical contacts, that rising silver prices will not easily slow down the growing industrial demand.

Additionally, as paper money continues to fail, people will buy silver and gold without regard to price, or they will buy simply because prices are going up!

Each year, silver mines produce about 650 million ounces of silver, about 200 million ounces come from scrap recycling, and about 100 million ounces used to come from investor selling, or government selling. That's a total of about 950 million ounces. Of that, about 42% is consumed by industrial use, about 28% consumed by jewelry, 20% consumed by photography, 5% consumed in coins and medallions, and that's 95% of total available silver each year! This implies either a "surplus", or "investment demand", of about 5% of the total. Investment demand remains small, but is growing!

Due to silver use, or consumption, since the 1950's, silver may now be more rare than gold, in above ground, refined, deliverable, forms. It is estimated that there are about 200-300 million ounces of silver available to the market at the present time. There are about 125 million ounces of silver at the NYMEX, the big commodity exchange in New York.

Each silver contract at the NYMEX is a promise. There are too many contracts, too many promises to deliver silver that may not exist. Each contract is for 5000 ounces. There are often over 175,000 contracts for 5000 ounces, that's a total of 437 million ounces of silver, promised to be delivered. Yet the exchange has only about a third of that in real silver. How can they promise to deliver more silver than exists? If they fail to deliver silver, according to the promises and contracts that they have made, then confidence in the world's entire financial system may collapse. Industrial users of silver may have to shut down their factories. To prevent this, the users will bid silver prices much higher.

Due to the risk of default in the silver futures contracts, I suggest that you avoid buying futures contracts, avoid options, and avoid storing your silver with anyone else! Take delivery of your silver, and put your silver in your own safe!

Despite silver's intrinsic properties as money, silver began to lose its status as money starting in the late 1800's, as nations stopped using silver, and started using only gold as money. Over 100 years of this "demonetization" has caused a serious drop in silver's value, and this trend is about to be reversed as investors learn about silver's intrinsic properties (and market fundamentals) again.

In the end, as paper money fails completely, the neglect of silver's use as money will be over. Once again, silver will be valued based on other measures of value, such as a day's wage, or a ratio to gold. If silver exceeds its historic value, as I expect it will, due to the scarcity, from its importance in electronics and photography, then perhaps a silver dime, silver quarter, or silver dollar's worth of silver will be worth far more than a day's wage, as it once was.

How high will silver prices go? You do the math on what a day's wage should be, and you tell me!
Will people be hurt if silver and gold prices rise? Not you if you own some! But also, honest weights and measures used in commerce are supposed to produce prosperity for all of society, not poverty.

But you must act to benefit from this information.

Don't wait for silver to rise before buying it. Silver prices could rise by over $20/day to exceed $100/ounce at any time if large funds or billionaires buy with desperation.

Gold:A perfect Commodity for Futures Trading!!

• Gold is money, because of its fundamental nature.
• Gold is liquid and easily traded, with a narrow spread between the prices to buy and sell (about 1%).
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There is not a single other commodity with those attributes, except, perhaps, for silver. Since silver is less valuable than gold, and since gold is too valuable to be used for small transactions, there is potentially more monetary demand for silver. When gold becomes money again, silver will be desperately needed to make change. Platinum and palladium may come close to gold, but they are not so easily recognized by the masses, and are used mostly by industry.