The Hindu Business Line : Bears bring down pepper futures

Pepper futures market continued its downward trend on Wednesday for want of follow up and on bearish activities of some cartels despite the fundamentals remaining strong.

Until and unless some control is brought in the intra-day trade, such a situation would continue to prevail in the market, market observers here said. They said Indian pepper was competitive at $4,000 a tonne (c&f) as the prices of Asta grade at other origins are firm at higher levels.

Distant positions

Overseas buyers are looking at distant positions. But, Indian exporters are not ready to offer as Sep/Oct is trading at a premium at $4,200 a tonne.

Because of the restriction on nearby position, those investors, having huge stocks and completed six months, were liquidating and buying fresh stocks at slightly higher prices outside the exchange, they said. Therefore, enquiries are now floating outside the exchange. July prices are competitive but the exporters are not able to cover, they said. Some stray business said to have taken place in Brazil at $3,800 a tonne (f.o.b.). But the Japanese farmers in Brazil are bullish and not ready to offer below $4,000 a tonne, a report said. Similarly, the local prices in Indonesia are at higher levels.

FMC decision impact

Reacting to the FMC decision on Tuesday to reduce the margin for buyers and sellers, trade sources here told Business Line that along with it, the FMC should have increased the position for genuine players.

They alleged that in intra-day trade, thousands of tonnes of pepper were traded without spending a single penny and as a result speculative activity has reached the stage that it occupies 90 per cent of the trade, while futures trading is restricted to 10 per cent. According to them cartels based in Rajasthan, Madhya Pradesh and Maharashtra are manipulating the activities under the disguise of speculation. These cartels are active in the intra-day trade which is beneficial to the brokers and the exchanges. This would help increase the turn over but at the same time the genuine export trade is negatively affected, they alleged.

TURNOVER FALLS

July contract on NCDEX moved up Rs 6 a quintal on Wednesday to Rs 15,159. All the other contracts dropped from Re 1 to Rs 88 a quintal.

On NMCE, July contract declined by Rs 11 to Rs 14,750. The fall in other contracts except Sep was from Rs 47 to Rs 105 a quintal. Sep went up by Rs 218 to Rs 15,573 a quintal. Total turnover on NCDEX fell by 3,966 tonnes to 12,694 tonnes, while on NMCE it slipped by 169 tonnes to 1,219 tonnes.

Spot prices ruled steady on Wednesday at previous levels of Rs 14,200 (un-garbled) and Rs 14,800 (MG 1) a quintal.