The country’s second largest commodity derivatives exchange, the National Commodity & Derivatives Exchange (NCDEX), has levied 10 per cent special margin on all running contracts of pepper to control volatility in the prices.
The exchange through a circular dated May 24 said that it was levying 5 per cent special margin on all long positions for pepper contracts over and above 5 per cent of cash margins. This was in addition of over 10 per cent initial margins levied on the contract earlier.
The special margin was levied to control the abnormal volatility in near month contract in the last couple of trading sessions. According to NCDEX website, pepper prices hit both upper and lower circuit almost every day since May 14 to hit on at Rs 30502 per quintal for the contract maturing in June.
The price volatility may continue till end-June, but not beyond, say observers. The new crop in Malaysia, Brazil and Indonesia would be ready in six to eight weeks. Vietnam is yet to market 65 per cent of its fresh crop. So, global supply is likely to increase during July-September. Overbought Indian pepper futures would burst unless overseas demand increases very sharply, said a trader in the spot market here.
Based on earlier reports that global supply would shrink, Indian futures took a speculative route. According to leading exporters, this was not in line with the reality and the increased supply will begin to impact the price line after a couple of weeks.
India has been a net importer since 2009. This year, with Indian prices staying high, more imports will come into the country, said experts.
Harvesting will be over by the end of this month in Kerala, Tamil Nadu and Karnataka. It has been completed in the new cultivation areas of Meghalaya and Assam, where the output has been a record 5,000 tonnes this time. This rise would partly compensate for an anticipated loss in production in Kerala and Karnataka. With a bullish view on prices, farmers have so far sold only 20 per cent of the fresh crop, or 10,000 tonnes, in the current season. Once the price begins to fall, much stock is likely to be offloaded.
