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The meltdown in metal prices in the last three months seems to have pushed investors to agriculture commodity futures. This is evident from the divergent trend in June turnover registered by MCX and the agriculture commodity-focused NCDEX.
MCX, which derives 80-90 per cent of its volumes from metals and energy contracts, registered a nine per cent drop in turnover at Rs 1,048,741 crore in June against Rs 1,148,123 crore logged in May, largely due to a fall in metal prices. On the contrary, NCDEX's turnover was up 22 per cent at Rs 137,665 crore (Rs 112,095 crore) in the same period.
Both the exchanges together account for about 97 per cent of the total turnover of commodity futures traded on the five national exchanges.
Taking a cue from the international markets, metal prices, especially gold and silver, plunged in the futures markets leading to the decline in MCX turnover in June.
On the other hand, a forecast of a normal south-west monsoon brightened the prospects of kharif crop leading to interest in agriculture commodity futures.
Recovery worries
Ms Smita Sinha, Head-Advisory Desk, Karvy Comtrade, said, of late, commodity markets across the world have been under pressure with investors booking profits on increasing evidence of a slowdown in global economic recovery. While prices of all commodities fell since the beginning of May, silver had seen the highest percentage losses, she added.
On the MCX, silver contract for September delivery fell from Rs 72,717 a kg in April to Rs 54,780 in June, a drop of 33 per cent in three months. Silver traded at Rs 53,976 a kg in May.
Similarly, gold for August delivery plunged from Rs 22,870/10 gm in April to Rs 22,161 in June, a fall of three per cent. Crude oil futures were down 21 per cent to Rs 4,118 a barrel from Rs 4,997 a barrel in April. It traded at Rs 4,603 a barrel in May.
In contrast, chana for July delivery rose seven per cent to Rs 2,742 a quintal in June against Rs 2,566 logged in April. Most other agriculture commodities such as pepper, soyabean and soy oil were almost flat.
The downtrend in MCX turnover may be short-lived as metal prices have started hardening with the uncertainty in global economy and euro crisis looming large.
Ms Reena Walia, Senior Research Analyst, Angel Commodities, said gold and silver prices are expected to trade on a positive note mainly on account of choppy sentiments in the global markets coupled with increasing concerns over euro zone debt issues which would boost demand for gold as a safe heaven.
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