Rubber traders from Kerala have unanimously sought delivery of goods for their open position in a late evening meeting with the officials of the Ahmedabad-based National Multi Commodity Exchange (NMCE).
The Forward Markets Commission (FMC), the commodity market regulator, on May 7 had abruptly suspended trading in rubber and directed the exchange to settle all contracts at the May 6 closing price of near-month contract.
The May 6 closing price at Rs 11,990 per quintal of May contract, however, was at least Rs 200 above the spot price. Therefore, traders with sell option are insisting on delivery while buyers are unwilling to accept it.
"They want delivery as the prices of natural and synthetic rubber are rising because of the global demand," said Anil Mishra, chief executive officer of the exchange after a meeting with 100 traders on Wednesday evening.
Approximately 700 traders were having open position at the time of the suspension of rubber contracts from the future platform. For the four contracts of May, June, July and August, open position on May 7 was recorded at 1,428 tonnes, 1,761 tonnes, 812 tonnes and 323 tonnes, respectively.
Also Read
The abrupt suspension of futures trade by the FMC has hit several Kerala traders, the hub of rubber production in the country. Therefore, they want compensation for their losses either from the government, the regulator or the exchange.
Being a party to trade facilitation and in order not to spoil relationship with the traders, the NMCE is committed to compensate a part of their loss after evaluating all options, said Mishra.
The meeting was convened to know the intention of rubber traders who started profiting after a wait of 6-7 years as the prices started rising in the international market. But, the suspension in futures trade has hit them hard.
When asked about the approximate losses suffered by the traders, Mishra said the representatives were almost from local co-operatives and their figures were different depending upon their exposure on the date of suspension.
"We would first prioritise intention matching facility and thus, we have asked participants to show their intention. A majority of them were found keen not to opt for cash settlement as directed by the FMC," said Kailash Gupta, MD of the exchange.
India contributes about 8.20 lakh tonnes of natural rubber out of the world production of 9685,000 tonnes. The country's demand and production of natural rubber almost matches.