Comments
With the National Commodities and Derivatives Exchange (NCDEX) suspending trading in castorseed futures over alleged speculation on Wednesday, the fate of other volatile commodities such as turmeric and coriander (dhaniya) hangs in balance.
The exchange suspended futures trading in all castorseed contracts at close of business on Wednesday and decided to settle outstanding positions at the daily settlement price of January 27.
NCDEX registered a turnover of ₹350 crore on Wednesday.
“The exchange has taken this decision to maintain market equilibrium, safeguard market integrity and in the general interest of commodities market,” said the exchange.
The average weekly price of turmeric has fallen to ₹8,322 a quintal on January 24 from ₹10,166 a quintal registered in the week ended January 3. Similarly, coriander dipped to ₹6,345 a quintal from ₹7,251 in last four weeks. Though fundamentals are weak in these commodities, traders suspect that few brokers had inside information on the impending ban.
In fact, NCDEX has drawn flak last year when coriander was quoted at ₹10,000 a quintal while in the spot market it was traded at about ₹7,000. The exchange justified the premium by claiming the quality of coriander delivered on its platform was far superior.
Navin Mathur, Associate Director, Angel Broking, said the sentiment of investors in agriculture commodity futures is affected by the sudden suspension of castorseed contract.
“The exchange should have given at least six days for investors to digest the impact of the announcement and wind up their positions,” he said.
Ajay Kumar Kedia, Director of Kedia Commodities, said the suspension would send a wrong signal to prospective global investors looking at investment in the exchange sphere.
“With the commodity market coming under the well-empowered regulator SEBI, one thought there would not be any sudden ban on agriculture commodity trading, but this was a shocker,” he said.
On the possibility of settlement crisis, a member said speculators with huge investment may find it difficult to settle their position, particularly if they have incurred loss but it will be managed because investors always keep surplus funds with their brokers.
Veeresh Hiremath, Research Analyst, Karvy Comtrade, said castorseed prices was frozen at the six per cent lower circuit of ₹3,051 a quintal within 15 minutes after the trade started on Wednesday and there was hardly any opportunity for small investors to exit.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.