The Hindu Business Line : Continue compulsory delivery in pepper futures: Exporters

Kochi, Sept. 24 A group of major pepper exporters has urged the authorities concerned to continue with the compulsory delivery system without quantity restriction as the futures market without delivery system would hamper the farmers’ interest.

Ever since the multi-commodity exchanges were introduced, the very purpose of futures trading is getting shifted and it is totally in the hands of speculators, they alleged.

Speculators see the benefit only if the markets fluctuate irrespective of any fundamentals and finally the farmers are unable to judge any direction. Some of the exchanges are connected with stock exchanges, thus many of the stock exchange brokers are also members of the futures trade by virtue of being the member of the stock exchange.

These brokers, they said, are allowing unrelated parties across the country to trade in pepper that ends up in large volume of trade with wide fluctuations. There are cases of over 90,000 tonnes traded in a single day while India’s annual production is less than 70,000 tonnes, they pointed out.

Price influencers

They said the global pepper market, though going through a tight supply position, the Indian market had been constantly dropping because of the high speculative activity prevailing in the Exchange. It has been sending a wrong signal to the international market, resulting in the Indian farmer getting a lower price compared to other origin.

They alleged that untimely and unwarranted introduction of quantity restriction by the Forward Markets Commission (FMC) added fuel to the fire that resulted in forcing genuine exporters/hedgers to liquidate their position.

If the quantity restriction was not there it is our belief that India could have exported or canvassed orders for another 3,000 tonnes, which would have boosted up the price when these quantities were shipped out of India, they said.

All national exchanges together, they said, were holding around 10,000 tonnes of physical pepper against their open interest of around 25,000 tonnes, they pointed out.

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