The Hindu Business Line : Record physical delivery in pepper at NMCE

BREAKING all previous records, physical delivery of pepper moved up to 1,558 tonnes in the May series at National Multi-Commodity Exchange of India Ltd (NMCE), against a total transaction volume of 2,23,558 tonnes.

The total physical delivery of pepper ever since the launch of trading at NMCE was just 6,817 tonnes.

"The volumes of pepper has increased because of better crop prospects in Kerala and resultant volatility in prices: at the same time rubber and cardamom volumes remain at par due to stable prices and efficient price discovery. These apparent trivial physical deliveries are considered healthy for commodity futures market functioning as the hedgers quit the market efficiently because of the best convergence of prices of expiring contracts and ready delivery of prices," NMCE said in a press release.

The physical delivery in rubber was 342 tonnes against volumes of 29,336 tonnes and 66 quintals in cardamom against a volume of 24,302 tonnes in the May series.

Despite the surge in physical quantity of delivery of pepper, the percentage was 0.7 per cent, that of rubber 1.17 per cent and cardamom 0.27 per cent.

Through the Punjab National Bank's scheme of financing against Central Warehousing Corporation receipts accompanied with forward sales contract with NMCE member, 254 tonnes of pepper was delivered in May 2005 series.

Since its initiation in November 2004, PNB's overwhelmingly accepted scheme has helped traders and farmers in Kerala enjoy rich benefits, the release said.

This PNB scheme backed by forward sale contract of NMCE is proving to be a boon for the industry and in the long run is expected to provide enough financial backing to the industry as a whole.

Mr Kailash Gupta, Managing Director of NMCE, said, "With the introduction of T+2 contracts, NMCE's market will unbeatably improve in efficiency. Moreover, institutional lenders such as banks will have better comfort than in current scheme due to enhanced efficiency of realisation from warehouse receipts. That means bank's risk will also further reduce with T+2 contracts."

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