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Pepper futures witness high volatility

G.K. Nair

Kochi , Sept. 7

The pepper futures market, on Thursday, was highly volatile with prices shooting up and falling sharply on strong speculative activities.

The September contract on Thursday shot up to Rs 13,900 a quintal and then dropped to close at Rs 12,800 on NCDEX. Meanwhile, on the same exchange in single contract alone 66,437 tonnes of pepper, i.e., more than the total crop of country was traded in one day, "which is not at all a healthy sign", market observers told Business Line. The total turnover of the exchange on Thursday stood at 90,002 tonnes, an increase of 31,203 tonnes over the previous day's close of 58,799 tonnes.

On NMCE, the September position dropped by Rs 220 a quintal to close at Rs 12,707 from Rs 12,927 on Wednesday.

The drop in other positions on NCDEX was from Rs 371 to Rs 277 a quintal while on NMCE it was from Rs 654 to Rs 343.

The total turnover on NMCE also increased by 1,445 tonnes to close at 12,525 tonnes from 11,080 tonnes.

Open interest

The open interest on NCDEX on Thursday was 26,419 tonnes as against 26,621 tonnes. Notably, open interest for October was at 16,336 tonnes while the turnover was at 66,437 tonnes. On NMCE, it was at 5,448 tonnes compared to 5,470 tonnes yesterday.

The outstanding position for September, October and November on NCDEX was 2,935 tonnes, 16,336 tonnes and 2,655 tonnes respectively while for October on NMCE it was at 3,720 tonnes.

Cartels involved?

Some cartels, involved in the trade, with strong money power seem to be engaged in pushing up and pulling down the market without any demand either from the domestic or from the international market, they alleged. "It is high time, therefore, that the regulator looked into this type of activities/fluctuations as the pepper industry never witnessed such a situation before," they claimed.

The prices, which were shooting up to hit the maximum permissible limits on Wednesday, have dropped substantially on Thursday, they said.

The international market continues to rule firm because of the persisting tight supply position.

Indonesia was offering Lasta at $2,700-2,800 a tonne (f.o.b), while Brazil at $2,400-2,450 a tonne (f.o.b). Indian parity was at $2,975 a tonne (c&f). Vietnam was not offering ASTA grade. However, its FAQ grade price was at $2,500 (FOB), trading sources said.

Spot buying interest has pushed up the prices by Rs 500 a quintal to Rs 11,700 (un-garbled) and Rs 12,100 (MG 1) on Thursday.

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