The pepper futures market crashed on Tuesday on heavy liquidation and switching over with all the contracts falling sharply.

The trade attributed the liquidation to introduction of 3 per cent additional margin on the buyer and seller. It has influenced people to liquidate and switch over, market sources told Business Line .

Some in the trade were of the opinion that it was high time for the exchange and the regulator to look into this aspect of additional margin so far as sellers are concerned. “There is no point in charging additional margin on the seller who is already investing in the cargo,” said a source.

On the spot some of the operators were buying high range Rajakumari pepper at Rs 280-Rs 285 a kg in the morning. But as the market started falling, they withdrew. Investors were ready to buy farm-grade pepper from the plains at Rs 20 below the July price. But sellers were hesitant, said sources.

At the same time Karnataka was offering at Rs 255 a kg delivered anywhere in India, they said.

June contract on the NCDEX fell by Rs 834 to close at Rs 29,460 a kg while July and August dropped by Rs 899 and Rs 870 respectively to close at Rs 29,222 and Rs 29,081 a quintal.

Turnover increased by 3,729 tonnes to close at 12,735 tonnes. Open interest dropped by 587 tonnes to 11,829 showing heavy liquidation.

June open interest fell by 1,336 tonnes to 5,186 tonnes. July and August increased by 719 tonnes and 62 tonnes respectively to 5,141 tonnes and 1,204 tonnes.

Spot prices fell by Rs 400 in tandem with the futures market trend and liquidation to close at Rs 27,400 (ungarbled) and Rs 28,200 (MG 1) a quintal.

Indian parity in the international market dropped to $6,850-$6,900 a tonne (c&f) but still remained out-priced, they said. All other origins were reportedly offering lower, sources added.

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