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China: Pepper supply shortage leads to price increase

The main supply sources of domestic pepper, other than from storage, have tightened since April. The volume on the market has gradually decreased and supply is growing smaller. Product delivery increased, and the price of domestic pepper increased.

When dried pepper was flowering in 2017, the plants suffered from extreme weather conditions. This caused a decrease in production volumes throughout the country. The effect was particularly bad in Henan where production per hectare decreased by around 33%. Other places, such as Jinxiang and Dezhou in Shandong also suffered from the extreme weather conditions. The dried pepper market still has a lot of room for price increase in 2018.

The competition of imported products has a beneficial effect on the dried pepper market. The monthly import volume via border trade is limited to around 8000 tons in 2018. This limits the influence of accumulated import on the domestic market. Furthermore, there is relatively little high-quality dried pepper in storage. There is a shortage of supply from storage to the wholesale market. Few wholesale traders have their own supply, and the consumer market is about to enter peak season. When the consumer demand increases, the price of dried pepper will also continue to go up.