NCDEX allows local tur, urad for deliveries to ease supply

National Commodity and Derivatives Exchange on Wednesday modified contracts for urad and lemon tur by allowing local produce to be acceptable as deliveries in a bid to reduce narrowness of the contracts.

However, this is just a short-term initiative as the new contracts with different specifications to remove the narrowness in contract specifications and inclusion of more varieties are awaited.

"We had sought details on new contract specifications from NCDEX. However, we are not fully convinced with the proposals we had received. We are in no hurry to introduce new contracts and thus asked the exchange to modify the current ones," said a senior member of the Forward Market Commission.

The new contracts are expected to be launched in September, the FMC member added.

Commenting on the issue, a senior NCDEX official said, "our proposal is under FMC consideration and some issues with respect to it are still being worked out".

Overall, the modification in the running contracts is just a small term solution. The modifications also involve introduction of deliverable and premium discounts and launch of additional delivery centres.

Discounts and premiums are decided with respect to the quality of the product and the distance which the commodity may have to cover to reach the centre.

In case of urad and tur, price quoted is ex-Mumbai and thus there is a cost element involved in case of other centres. There is a discount of Rs 100 per 100 kilograms for centres like Chennai and Kolkata as these are ports and see maximum traffic from Myanmar.

The modified contracts are for maturity in June, July, August and September for urad and June and July for tur, a NCDEX circular stated

Henceforth, both the Myanmar origin varieties and Indian varieties in urad and tur m, with similar specifications, have been recognised as valid for delivery. The contracts earlier were said to be narrow as the deliverable quality was only of Myanmar origin.

In the case of tur, Myanmar origin Lemon tur and Indian tur were considered as two separate contracts for trading on the exchange. Now, both the contracts would be merged.

The exchange has added more delivery centres for urad and tur under the modified contracts. In case of urad, while Mumbai remains the main delivery centre, Tenali in Andhra Pradesh, Kolkata, Chennai and Jalgaon and Akola in Maharashtra too will be delivery

centres. Similarly, for tur, besides the main delivery centre of Mumbai, the exchange has also decided to accept deliveries at Akola and Latur in Maharashtra, Kolkata, and Gulbarga in Karnataka. This modification has been approved by the Forward Market Commission," said Anupam Mishra, FMC director.

FMC will continue to look at the issue of numerable available varieties of tur, Mishra said.

Urad and tur contracts have seen a sharp spurt in prices since December 2005. Following this, FMC had asked NCDEX to rework on the contracts. The narrowness was largely responsible for the sudden rise in prices.

With signs of strong demand in India, international prices are also firm. At present, urad of FAQ variety is quoted at $ 660 a tonne compared with $525 a tonne in January, chana at $485 a tonne compared with $365 a tonne in January and lemon tur at $350 a tonne versus $250 a tonne in January.