Isabgul fails to draw traders on NMCE

Isabgul (psyllium seed) futures is yet to see the first trade on the National Multi Commodity Exchange of India (NMCE) since its launch on March 5 this year.

"Traders were earlier demanding a warehouse in Unjha, and we provided that. Even then nobody has turned up yet for actual trades," Managing Director Kailash Gupta said.

"In the beginning, traders' plea was that there was no volatility in the physical market to go in for online futures trade. But, volatility persists in the spot market this year, and prices have surged to a new high of Rs 6,000 a quintal. Still, traders are not showing interest. Perhaps, this is because of the reversal in trend "" too much volatility now "" that traders are staying away from the bourses," he said.

However, the MD was hopeful that the commodity would be able to attract traders' attention next season beginning March 2007. "We are hopeful that isabgul will attract traders and witness some volume next year."

There has been no change in trade norms to attract participants. Generally, participation is much wide when the price of a commodity settles down to certain level. The surge in the spot price of isabgul has made traders apprehensive "" they seem be opposed to taking risks in futures trading.

As crop was lower by around 40 per cent this year, there was no delivery at the exchange's warehouse.

Therefore, the total output for this year is estimated at 8 lakh bags (of 75 kg each), a decrease of 5 lakh bags from normal levels. Unseasonal rains destroyed a large quantity of the crop in when it was ready for harvesting.

The spot price of good quality isabgul is currently quoted at Rs 1,200 per 20 kg, with the last fortnight having seen a fall of 12 per cent or Rs 150.

The downtrend is mainly attributed to the lack of demand from overseas.

"NMCE representatives had approached us before launching the commodity (isabgul) with no trade value, and we suggested that they should to be careful, as this commodity, which is buyer-dependent, is grown in a very narrow area. Hence, its entire market condition is known and transparent. Obviously, nobody is interested in futures trade at present. We may go in for it in the future," said Narendra Patel, president, Isabgul Processors' Association, Unjha.