NCDEX jeera quality disappoints investors

The poor quality of jeera delivered by the leading agri-commodity bourse National Commodity and Derivatives Exchange (NCDEX) has disappointed investors, who had held long positions in the February contract, traders and analysts said.

Those who expected uptrend in prices at the end of the February contract, were in for disappointment as prices nosedived on reports of poor quality jeera delivered by NCDEX, they said.

Jeera prices of February have fallen by 22 per cent to Rs 8,700 a quintal since the beginning of the contract.

"I had thought jeera prices would be bullish at the end of the contract, but my guesses were wrong. I never expected prices would dip below Rs 9,000 level a quintal," a Mumbai-based investor who does not want to be identified said.

He said, "Last week, I had to clear off my position because the contract expiry date was nearing. I could not have held for long, else I would have had to accept the compulsory delivery norm".

The risk factor is more in agri-commodities because their prices are influenced by the vagaries of weather conditions, Religare Commodities analyst Ajitesh Mullick said.

"The sharp fall in prices at the end of the contract proved negative to investors who had long positions. We normally advise investors to take intra-day positions to reap the benefits then and there," he said.

On price fall, Hyderabad-based Karvy Comtrade analyst Veeresh Hiremath said, "Arrival pressure coupled with lack of buying interest amidst the news on NCDEX jeera pulled down both future and spot prices last week,"

Exporters stayed away from the market on fear of inferior quality of jeera, he said.

Commodity regulator Forward Markets Commission (FMC) had recently rejected the samples of jeera collected from the NCDEX go-down last September, saying that the commodity failed to meet the quality norms.

This affected the futures as well as spot market. The price fall was seen in all jeera contracts, analysts said.

According to traders, the February contract was affected the most as prices slipped drastically just a week before the contract expiry.

Besides February contract, March delivery of jeera also dipped to its lowest level at Rs 8,957 a quintal against Rs 12,097 a quintal, which was highest in January.

Nevertheless, market analysts are upbeat about the jeera prices and said that prices have started recovering from on Wednesday after a week-long lull.