FMC ups trading unit of palm oil to 10 tn

The Forward Markets Commission (FMC) has raised the trading unit in crude palm oil and RBD palmolein to 10 tonne from one tonne earlier to help generate liquidity in these commodities on exchanges. Similarly, the tick size of yellow soybean meal (domestic) and yellow soybean meal (export) has been raised to Rs 10 from Re 1 earlier.

Commodity exchanges have been directed accordingly.

According to an analyst, the step would bring in some liquidity with the involvement of physical traders. Today, every lot in physical market is traded in 10 tonne. Each tanker of edible oil, be it the crude palm oil or RBD palmolein contains 10 tonne of the oil. Hence, it makes sense for exchanges to bring derivatives traders at par with physical traders.

"Earlier, we kept the trading unit low in order to involve small players, but the strategy did not work out well. Traders were demanding since long to raise trading unit to 10 tonne," the analyst said. These contracts were more or less illiquid, and hence a measure was needed to bring in liquidity, said Amol Tilak, an analyst with Kotak Commodity Services.

The FMC has directed commodity exchanges to modify contract specifications in accordance with all the changes incorporated by March 10.

Meanwhile, the National Commodity & Derivatives Exchange (NCDEX) has added Calicut and Trissur as additional delivery centres for all rubber contracts expiring in July 2007 and thereafter. Till now, Kochi was the only delivery centre for all rubber contracts.