An Overview of the Market

Pepper prices in Vietnam have been trending downward in recent times. As of July 18, prices in some of Vietnam's critical pepper-producing regions had reached their lowest levels. According to Công thương (Industry and Trade) Magazine, industry experts suggest that there is currently no new impetus to drive pepper prices upward. However, the domestic pepper price has stabilised at a new rate, which is unlikely to decrease further from the current level. In the short term, the pepper market appears less energised, mainly due to rising domestic coffee prices, which are attracting capital flows away from pepper trading.

Production Costs and Profit Margins

The standing vice chairman of the Chư Sê Pepper Association in Gia Lai Province notes that the average production cost of pepper is currently fluctuating due to increased material and other costs. Despite the current selling price being more than double the production cost, pepper growers are making significant profits.Many pepper growers are not in a hurry to sell their produce unless they need the capital. They anticipate that the current low supply will eventually drive pepper prices back up. Industry experts predict that future pepper prices might surpass the highest level of the pepper price cycle a decade ago.

Export and Global Market Trends

The Vietnam Pepper Association highlights that the current price level of Vietnamese pepper is still relatively low compared to other major producing countries. This suggests a substantial potential for price increases in Vietnamese pepper. Moreover, Vietnam's pepper export to China in the second quarter of 2024 was lower than expected. However, businesses forecast an increase in purchasing demand from China starting from the third quarter of 2024, driven by the need for year-end festivals. This demand surge is expected to push pepper prices up in the latter part of the year.

Despite the current downturn in pepper prices, the outlook for the market remains optimistic. The stabilisation of prices at a new rate, coupled with potential increases in demand from China and other global markets, suggests that a price rebound is likely by the end of the year. With significant profits still being made by growers and the possibility of prices surpassing historical highs, the Vietnamese pepper market holds substantial promise for exporters.