NCDEX gives assurance on chilli quality

National Commodity and Derivatives Exchange has clarified that the quality of chilli in the exchange accredited warehouses is as per the contract specifications and the exchange will compensate for losses, if any, due to inferior quality of the commodity, a senior exchange official said on Friday.

"In case, the quality (of chilli) delivered is not matching the contract specifications, we will ensure that their (traders') losses are compensated by the warehouse service providers," NCDEX Chief Business Officer Narendra Gupta said.

If the buyers of chilli on NCDEX wish to take delivery, they will be given opportunity for assaying the stocks in warehouses, and the delivery would be effected only if they are satisfied, he said.

The exchange has also issued a circular, reiterating that traders are entitled to get the quality tested by the approved assayer on submission of the rematerialisation request.

It was reported on September 20 that traders having long positions in September chilli contract were unwilling to take delivery on quality concern, which triggered a selling spree in the contract in the last five days.

Some informed traders might have entered fresh short positions during last five days of expiry of September contract that led to violation of contract norms.

Concerns over the quality prompted traders to continue unwinding their positions, which resulted into nearly Rs 400 fall in the last three to four sessions, in October futures also.

"Traders are exiting long positions as there are concerns over the quality of chilli kept in the NCDEX warehouses. Nobody wants to take delivery for these chillies," Vinaykanth of Guntur-based Vinay Spices said.