The value of trade on the Mumbai-based National Commodities and Derivatives Exchange (NCDEX) has been steadily rising over the past few days driven by a surge in the volume of trades in agri commodities as apprehensions on a lower kharif output gain ground.

The daily average value of trade on NCDEX during the three trading days, post-budget (July 6-8), has jumped 50 per cent to Rs 2,380 crore compared to three days of trade (July 1-3) prior to the Budget.

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“There are signals that the monsoon rains that support the kharif crop is not satisfactory and there could be a drop in output on delayed sowing. The apprehensions on future supply positions is leading to volatility in agri-commodities and more people are taking positions,” said Madan Sabnavis, chief economist at the exchange. He added that the surge in volumes has been witnessed primarily in chana, guar seed, soyabean and soya oil.

He said the surge in volumes could be partly driven by improved sentiments following the CTT abolition. “Earlier, there was a fear that the CTT would get operational. But now, there is clarity among investors which has improved sentiments,” he said.

The monsoon rains, crucial for the standing kharif crops like paddy and pulses, is forecast to be lower than normal, the government said on June 24. The 2009 monsoon rains would be 93 per cent of the long-term average, which is lower than an earlier forecast of 96 per cent.

The US Department of Agriculture (USDA) too has sounded a word of caution on India’s kharif output. “The slow progress of the monsoon and its poor performance during the first quarter of the monsoon season (June-September) is causing serious concern among farmers as well as the (Indian) government,” said a report by the USDA attache in New Delhi.

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