The Hindu Business Line : Downward trend continues in pepper futures

Kochi May 23 The pepper futures market continued its declining trend on Wednesday, mainly considered as a fallout of the restrictions introduced by the Exchanges.

The margin and quantity restrictions of late are negatively affecting the futures market, which in turn is influencing the international market, market sources told Business Line.

Indian exporters who were catching up with the international market have been put into difficulty now. Those who were hedging from the Exchange were finding the quantity restrictions limiting.

Besides, "the market witnesses high volatility in the trade because of the increased intra-day trade, which in fact has made the trade an online gambling," Mr Kishor Shamji, former President, India Pepper and Spice Trade Association,said.

According to him, if this kind of situation is not arrested, genuine players will get out of the market besides killing the trade.

Add to this the non-availability of space in the warehouses as they become fully occupied when the contract nears maturity. "When thousands of tonnes of pepper is traded daily, there should be adequate space to accommodate the goods," he said.

Spot availability is limited while the nearest month is available cheap and the exporters are buying it to cover. Indian parity is at $3,800-$3,850 a tonne (c&f) as against Indonesia's Lasta at $3,850 a tonne (fob) and Brazil's B Asta at $3,800 (fob).

According to the sources, Indian pepper is competitive but the current trend in the futures has sent out a feeling to overseas buyers that India does not have enough exportable surplus.

Contracts

May contract on NCDEX declined by Rs 80 a quintal on Wednesday to close at Rs 13,754 from Rs 13,834 on Tuesday. The drop in other contracts was from Rs 43 to Rs 111 a quintal.

On NMCE, May contract fell by Rs 117 a quintal to close at Rs 13,539 from Rs 13,656. The decline in other contracts was from Rs 86 to Rs 391 a quintal.

The total turnover on NCDEX was up by 3,424 tonnes to 48,926 tonnes while on NMCE it declined by 50 tonnes to 4,308 tonnes.

The total open interest on NCDEX dropped by 698 tonnes to 24,467 tonnes while June position fell by 1,111 tonnes to 13,493 tonnes. July position increased by 397 tonnes to 7,072 tonnes.

On NMCE total open interest declined by 183 tonnes to 3,344 tonnes while June position dropped by 201 tonnes to 2,536 tonnes.

Spot prices ruled steady at previous levels of Rs 13,700 (un-garbled) and Rs 14,300 (MG 1) on Wednesday.

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