The Forward Markets Commission has decided to impose a special cash margin of 20 per cent on all pending contracts of barley to curb its volatility in the futures trade.
Barley, which is traded in large volumes on the NCDEX, is primarily used as a major animal fodder. It is also an ingredient for beer, certain distilled beverages and various health foods.
The FMC in an order said: “In view of excessive volatility in the prices of barley, special cash margins at 20 per cent on the long side are being imposed with effect from the beginning of trading day i.e. April 27, 2012, on all contracts.’’
The special margin would also be applicable on contracts that are yet to be launched on the exchanges, it said.
Margin is a deposit that is required to be given by traders before entering into a pact to buy or sell the commodity at future date.
During the month, prices of barley have risen by nearly 12 per cent mainly due to speculative buying in view of strong demand from beer making industries in spot markets.
Futures prices
Futures prices of barley were quoted at 1,520 per quintal early this month.
May contract was trading at Rs 1,674.5 per quintal today against yesterday’s close of Rs 1,708.5 per quintal.
June contract stood at Rs 1,710 per quintal against last close of Rs 1,744 per quintal on the NCDEX. Spot prices of barley, however, were ruling at about Rs 1,587 per quintal today.
The regulator also asked the exchanges not to accept fixed deposits and other collaterals against cash margins for barley contracts.
The FMC has already imposed higher margins on other farm commodities such as soyabean, rape/mustard seed, chana and refined soya oil contracts to curb the volatility in prices.