The erratic trading in pepper and turmeric on the National Commodity & Derivatives Exchange (NCDEX), India’s largest agri-centric commodity trading platform, has come under the regulator’s scanner.
The Forward Markets Commission (FMC), the commodity derivatives markets watchdog, asked NCDEX to investigate into the possibility of “erratic” trade in turmeric and pepper on the basis of one client and one member taking the largest position in these two commodities for the last few months. The regulator has asked NCDEX for a report in three days.
“There is a possibility of erratic trades happening on NCDEX in pepper and turmeric. Otherwise, it is not possible to have one client and one member holding the largest long-side position in these commodities consistently. We have asked NCDEX to investigate,” said a senior FMC official.
Turmeric has moved against the normal wave. Generally, the price of all agri commodities goes up during the lean season (when supplies are not much). For turmeric, too, this is the season for prices to go up as despite having bumper production, massive crop damage was reported last year. Sowing is on for harvesting in January and, hence, prices should ideally move up. But, according to an FMC official, turmeric futures have dropped below spot market prices.
According to an NCDEX website, spot polled price of turmeric in the benchmark Nizamabad market moved marginally up to Rs 5,520 a quintal on Thursday from Rs 5,450 a quintal a month ago. The medicinal herb declined in futures trading during the same period. For delivery in October, the price fell eight per cent to Rs 5,672 a quintal in afternoon trade on Thursday from Rs 6,148 a quintal a month ago. The spot market price of turmeric fell lower than the futures market price a couple of days before.
Being an issue of monitoring and surveillance, NCDEX preferred not to comment. While FMC was concerned with the irrational price behaviour in turmeric, taking of the highest long side position by one client and one member also attracted the regulator’s attention in pepper.
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The price of pepper has remained relatively less volatile during the last one month, while the commodity moved marginally up in both spot and future markets. The spot price polled by the NCDEX showed that pepper price jumped to Rs 42,105.25 a quintal on Thursday from Rs 40,994 a quintal a month ago. Similarly, pepper for near-month delivery shot up to Rs 43,610 a quintal from Rs 42,470 a quintal in one month.
The FMC official did not reveal the name of the client and the member taking the highest long side position in pepper and turmeric.