Bear Operators Pull Down Pepper Futures Sharply (23-Feb-2010)
High volatility was witnessed in the pepper futures market and closed below the previous day's close on Monday on account of bearish activities by operators. The reasons for the decline in the pepper contracts pointed out to be are the upward trend in the stock market along with the strengthening of the rupee. Moreover, the arrivals of new pepper at the terminal market continued to remain very thin.
The primary markets too also experienced a similar situation. The good domestic demand continued to exist and hence the dealers were purchasing directly from the primary markets. Meanwhile, the growers realising the fact that of a a squeeze in availability, are reluctant to part with their produce at lower levels, market sources said.
For delivery, about 1,500 tonnes of the February contract is ready. Given this scenario, pulling down the futures prices without anyco-relation to the fundamentals would deprive the growers of remunerative prices, besides sending out wrong signals to the international market, they alleged. While, they said that the other producers would take advantage of this phenomenon by quoting lower in the overseas markets.
In Karnataka, Coorg pepper was traded at Rs 13,500 a quintal. The dealers from there were buying from here at prices Rs 12,700 to Rs13,100 a quintal for mixing with the Coorg pepper for sales in the upcountry markets, they claimed. The March contract dipped by Rs 250 a quintal to close at Rs 13,034 while the contracts for April and May slipped by Rs 261 and Rs 265 respectively to close at Rs 13,290 and Rs 13,550 a quintal.
The total turn over grew by 1,936 tonnes to 4,029 tonnes. Moreover, the total open interest surged by 87 tonnes to 10,227 tonnes while the March open interest fell by 106 tonnes to 7,733 tonnes while that of April grew by 193 tonnes. However, the May remained unchanged at 149 tonnes. The spot prices slipped by Rs 200 a quintal in tandem with the futures market trend to close at Rs 12,600 (ungarbled) and Rs 13,100 a quintal, despite good domestic demand and limited availability.
Meanwhile, in the international market, Indian parity remained at $ 2,950 - $ 3,000 a tonne and stayed out-priced.
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