Turmeric futures distorting spot rates, traders tell FMC

Owing to an accumulative loss of Rs 100 crore in the seven days between May 6-16, turmeric traders have demanded an immediate halt of futures on the National Commodity & Derivatives Exchange (NCDEX). The traders met Forward Market Commission (FMC) officials in this context.

The spot price of turmeric is approximately 20 per cent lower than the future price which invites traders not to hedge risks. Future prices for June is quoted at around Rs 3,000 quintal as against the spot price of Rs 2,300 per quintal.

Industry representatives including Manubhai Shah, secretary of the Bombay Kariana, Colour and Chemical Merchants Association, Shantilal Thakkar, Rajnikant Poppar and Nilesh Ruparel met the NCDEX official but the response from the platform official was lethargic, Manubhai Shah said.

The delegation along with by representatives from Nizamabad, Delhi and all other parts of the country met Rajeev Agrawal, member, FMC and Sunil Kulkarni, deputy director, FMC last Friday. But the response from regulator's representatives were not positive.

"We are looking into it. There are representations for vested interest. But we have mechanism to deal with such issues. The regulator is inspecting the matter in detail before arriving at any final decision which is impossible in one day or two," Rajeev Agrawal, said. "Guilty would be punished," he added.

NCDEX officials, their surveyors and those directly not connected with the turmeric market are solely to be blamed for the gap between futures and the spot, arising out of heavy speculation in May, June and July contracts.

Consequently, the May contract that was due for delivery for a total quantity of 40-45 trucks (400-450 tonne) was rejected by the surveyors. Since the material for hedging was rejected, it cleared an artificial bull run in the market.

After serious objection by the active traders, the authorised surveyors gave a guarantee for re-testing and acceptance for delivery in order to ease the supply and thereby, spot prices.

Surprisingly, during the controversial period there was no spurt in open interest. Traders led by Manubhai Shah has written a letter to Sharad Pawar in this regard to find any solution in this matter.

"If no solution is arrived at, the trades would be bycotted by the active turmeric traders of NCDEX," Manubhai Shah threatened. The NCDEX official was not available for comments.