Turmeric futures gained 4 per cent to Rs 6,608 a quintal on Monday, even a trading activity in most spot market was lacklustre. Prices in Nizamabad spot market was much lower at Rs 5,600 a quintal.
Low inventory at most exchange accredited warehouses had triggered sharp rise in prices in the futures market.
As per NCDEX circular, no fresh positions will be allowed in the near month turmeric contract till it expires on August 16.
Only squaring up of existing positions will be allowed. The financial gains made by taking fresh position in violation of the above directives will not be payable to the violator but will instead be deposited in the Investor Protection Fund, said the circular. Besides, penalty will be levied on violators, it added.
Turmeric futures are expected to fall due to profit booking and curbs imposed by the exchange.
Keywords: turmeric futures, turmeric August contract, NCDEX circular on turmeric, turmeric, turmeric profit booking, Nizamabad spot market,
Comments:
This is a typical case of squeeze, which is the trading abuse perpetrated by traders if the contract is not designed properly. Traders have made more money in such defective contracts designed by the NCDEX, and approved by the naive FMC, rather than in any other asset class permitted by SEBI -the regulator for securities and currencies. It is sad that the FMC has not learnt any lesson from such trade abuses in Tur and Urad, which saw many traders in Jalgaon constructing new palatial bungalows. The contracts in Tur and Urad had to be suspended because the NCDEX and FMC failed to remove defects in the contract design. It is high time that the FMC learns that there is more to regulation than merely to impose special margins. The least that the FMC could do is to tighten the limits on individual open interest and increase initial margins.
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