India pepper futures extend losses on low demand

MUMBAI, May 28 (Reuters) - Indian pepper futures extended losses for the third straight session on Wednesday on a slowdown in demand and tracking a fall in prices in Vietnam, the world's largest pepper producer and exporter, analysts said.

Both June and July contracts hit the initial 2 percent lower daily price limit, but later recovered.

"Despite a depreciation in rupee in last few days, export demand from US and other countries has slowed down," said Vibhu Ratandhara, an analyst with Bonanza Commodity Brokers Pvt Ltd. The Indian rupee has fallen nearly 9 percent so far in 2008 because of portfolio outflows and higher oil import costs.

Lower prices in Vietnam also pulled down the market, said an analyst with Motilal Oswal Commodities Broker Pvt Ltd.

Prices for 500 GL variety in Vietnam stood at $3,400 per tonne, while in India prices were at $3,700, he said.

India is the world's second largest producer and exporter, and lower prices in Vietnam can hurt India's export prospects.

However, sharp fall in prices is not expected and the market will again start rising on expected supply crunch in the second half of 2008, Ratandhara said.

The benchmark July contract would get support at 14,350 rupees and face resistance at 14,950 rupees, he said.

Spot pepper fell 1.1 percent to 14,725 rupees per 100 kg in spices hub of Kochi in Kerala.