The daily fluctuation limit of 4 per cent permitted at the National Commodity Exchange (NMCE) at the present price level ‘is a suicidal move’ and would send the wrong signals to traders, trade sources here claimed.
They said recommendations were made earlier to erstwhile regulator Forward Markets Commission (FMC) by the trade through the Spices Board to reduce the fluctuation limit to 2 per cent when prices crossed ₹450 per kg mark.
Similarly when prices touched ₹300 the fluctuation cap suggested was 3 per cent and at ₹250 a kg only 4 per cent was recommended as the daily fluctuation limit.
“To protect the interests of all concerned, the trade strongly recommends that the daily fluctuation limit be reduced to 2 per cent immediately,” Kishor Shamji, a veteran trader/exporter, told BusinessLine.
Though the rules were discussed at length on reducing the lot size from 1,000 kg to 100 kg, the trade in general “is surprised by how the advisory committee with experts at the helm of the affairs missed daily fluctuation not being taken into account,” he said.
Buyers were of the view that if one needs to cover 10 tonnes, one has to buy 100 lots, which itself would activate the market. Similarly someone wishing to sell 10 tonnes would have to sell 100 lots, resulting in bearishness.
Now, Vietnam has reduced prices to $5,500 a tonne, which works out to ₹375/kg, delivered in India. The crop size is reported to be above two lakh tonnes. It is feared that large quantities of imported pepper may also enter the Indian market to take advantage of the high prices prevailing in India even after paying the concessional ASEAN member duty of 25 per cent from Vietnam, he said.
The trade, he said, also believes that the minimum bulk density of 550 gram/litre should be fixed to avoid any quality disputes later.
Spot pepper slips
Meanwhile, bearishness continued in the pepper markets. On the terminal market, 30 tonnes were traded at ₹650-660 a kg. Spot prices fell further by ₹200 a quintal to ₹66,000 (ungarbled) and ₹69,000 (garbled).
November and January contracts on the IPSTA remained unchanged at ₹70,000 and ₹57,000, while December moved up by ₹1,000 a quintal to ₹64,000.
Export prices were at $10,625 a tonne c&f for Europe and $10,925 for the US.