Traders want ceiling on jeera futures to be lifted

Cuminseed traders have demanded the total removal of open position limit on the jeera (cuminseed) futures trading in commodity exchanges for better physical movement of the commodity.

After restricting the open position limit by 50 per cent for two months, the Forward Markets Commission (FMC), the commodities market regulator, on Tuesday raised the limit from 40 tonnes to 70 tonnes for clients' near-month contracts. However, traders feel that even the revised limit is not likely to change the market sentiment as it is too low for exports.

For members, the limit has been raised to 200 tonnes from the 120 tonnes earlier.

"Several exporters have failed to meet their export commitments despite a good overseas demand because of this restriction as they cannot take delivery according to the desired quantity," said an exporter on condition of anonymity.

According to Pravin Patel, an Unjha-based trader, the FMC's decision is not going to change the market sentiment at all as the revised position limit is also low. The jeera market should be free from any such cap for better export potential and higher realisation, he added.

Pankaj Thakkar, another trader from Mumbai, said that he would soon meet with the FMC chairman and urge him to lift all the position limits on the jeera futures.

V J Kurian, chairman, Spice Board, however, asked the traders to wait and watch the impact of the FMC's decision before taking any further action.

Meanwhile, traded volume on both the MCX and the NCDEX has declined dramatically. The volume for August contract on the NCDEX tumbled from 9,369 tonnes on July 19 to 3,399 tonnes on July 24 and to 2,517 tonnes on the following day, while open interest declined from 7,668 tonnes to 6,297 tonnes and 6,090 tonnes during the same period. The MCX too witnessed a marginal trade across all jeera contracts during the period, reflecting a decline in volume and turnover after the FMC's decision.

Jeera for August delivery on the NCDEX was quoted at Rs 12,048 a quintal on Thursday, a substantial decline from Rs 12,622 a quintal on July 19.

In the Unjha spot market, jeera was trading at Rs 13,000 a quintal and the price has not moved much due to a selling pressure from carry-over stocks.

India's cuminseed exports are likely to cross the Spice Board's target of 17,000 tonnes because of the country's competitive prices in the overseas market. The Indian tags are in the range of $2,900 and $3,100 a tonne compared with Turkey's $3,600 and Syria's $3,100 a tonne.