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Pepper futures on Tuesday continued their upward run after witnessing high volatility on limited selling and bullish activities. All contracts ended substantially above the previous closing.
When the ‘local recognised brokers' started sending out sell calls the market declined, but suddenly when national level operators started buying in pushed up the market.
Investors were not selling futures as spot was not available for buying. This scenario has aided the bulls to push up the market.
Investors
In fact, for those who had invested 100 per cent in physical pepper and 10 per cent in exchange for taking short positions etc, the investment ratio has gone up, trade sources claimed. The situation has reached such a stage that either the spot prices should move up or the futures market needs to come down. The difference between spot and futures have widened significantly, market sources told Business Line .
There is said to be good return for hedging, but the operators are allegedly trying to squeeze the hedging, they said. Domestic demand has slowed down because of good selling from Karnataka at Rs 237-240 a kg anywhere in India, they said.
At April delivery price, the Indian parity has gone up to $6,000 a tonne (c&f) for Europe and $6,100-6150 a tonne (c&f) for the US. Thus, the Indian parity has become out priced in the international market.
Indonesia is said to have not much material to offer. However, the rise in the Indian parity would influence the other origins which might also raise their prices, but marginally below the Indian parity, they said.
The April contract on the NCDEX shot up by Rs 373 to close at Rs 25,730 a quintal. May and June increased by Rs 343 and Rs 393, respectively, to close at Rs 26,117 and Rs 26,463 a quintal.
Total turn over moved up by 535 tonnes to close at 14,407 tonnes. Total open interest went up by 193 tonnes to 13,290 tonnes, indicating additional buying.
April open interest dropped by 328 tonnes to 6,644 tonnes. May and June went up by 476 tonnes and 23 tonnes, respectively, to 5,873 tonnes and 521 tonnes, showing also switching over.
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