FMC keeping close watch on India pepper futures

Last Updated : 23 June 2011 at 13:50 IST
KOCHI (Commodity Online): The continued volatility in India pepper futures despite the recent margin hikes have forced the market regulator to keep a close watch on the speculative activity in this hotly traded spice.

The imposition of 19% margin effected in various episodes has failed to curb speculative activity causing concern to a large section of investors.

Subsequent to margin impositions, the prices dipped for a while only to pick up later on.

FMC(Forward Markets Commission) is having the regulatory right to intervene in the pepper futures if it feels that excessive speculation is onboard. It can ask the exchanges to hike margins further if excessive trade detrimental to investor interests occurs.

When asked if it is time for intervention in the pepper futures, FMC Director V.C. Chaturvedi said,”We are keeping a close watch of the markets...if warranted we may intervene.”

Pepper futures have been ruling high for a while and black pepper futures on NCDEX touched the first upper circuit in the afternoon trading session on Wednesday. This was subsequent to witnessing high volatility in the early trading session for the day.

On Thursday, pepper November contract was the top gainer in the morning session on NCDEX at Rs.30326; a gain of 1.1%. The July contract came down later on to Rs.29730, a loss of 2.3%.

Pepper futures have been trading high and certain sources are suggestive of a dominant player buying around 4700 tons of pepper falling under May and June contracts. But there are other players who want pepper futures to turn bearish and NCDEX has become a battleground of top guns, certain sources informed.

“But it is only the market dynamics working out...” said Jojan Malayil, CEO of Bafna Enterprises, Kochi. “Markets are open...” he said.

According to the International Pepper Community, world pepper output this year will fall by about 6,500 tonnes against 2010 to 310,000 tonnes due to unfavorable weather conditions.

Supplies from India have been poor in spot because of almost stagnant production in the last two-three years. Unseasonal rain in October-December affected the yield of pepper vines and is likely to slash output this year.

During April-March 2010-11, total quantity of 18,850 MT of pepper valued Rs.38318.50 Lakhs ($84.13million) was exported as against 19,750 MT valued Rs.31392.50 lakhs of last year. The unit value of pepper has increased from Rs.158.95 per kg in 2009-10 to Rs.203.28 per kg during 2010-11.

As per the IPCs 2011 projection, India is expected to produce 48,000 tonnes, followed by Indonesia (37,000 tonnes), Brazil (35,000 tonnes), Malaysia (25,672 tonnes), China (23,300 tonnes), Sri Lanka (17,102 tonnes) and Thailand (9,750 tonnes).

As published in: http://www.commodityonline.com/news/FMC-keeping-close-watch-on-India-pepper-futures-40220-3-1.html