Chick pea futures volatile on contract specifications
Volatility in spot and futures expected till expiry of February contract
| Market players blame the contract specifications of the National Commodity and Derivatives Exchange (Ncdex) and The Multi-Commodity Exchange (MCX) for the volatility. The exchanges will only accept the new crop after March 4. |
| "Stocks of old chana crop are low in exchange warehouses and are expected to remain so till the expiry of January and February contracts. This is despite the Karnataka and Maharashtra crops entering spot markets," said a Delhi-based trader. |
| According to an analyst with a Mumbai-based brokerage firm, Karnataka crop has already entered the market and arrivals from Maharashtra are likely to flood the market by the end of January. |
| This will fuel the volatility in the spot as well as futures market till the expiry of February contract. |
| "Futures prices can touch a high of Rs 2,000 per 100 kg before the contract expiry (on January 20) and later by the end-January and early February fall to Rs 1,800-1,825 per 100 kg ," the analyst added. |
| Today, the Ncdex January contract (ex-Delhi) ended at Rs 1,975 per 100 kg, after seeing an intra-day high of Rs 1,983 compared with the previous close of Rs 1,953. The open interest for the contract was at 1,20,580 tonne compared with yesterday's 1,27,140 tonne. |
| Ncdex February contract ended at Rs 1,776 per 100 kg after an intra-day high of Rs 1,785 compared with its previous close Rs 1,768. The open interest for the contract was at 1,83,770 tonne compared with yesterday's 2,00,540 tonne. |
| The open interest of January and February contracts on both the exchanges are rising despite low stock. As per the latest available stock details, Ncdex and MCX have about about 1,525 tonne each in their respective warehouses. |
| Ncdex sources,however, feel market players are over reacting and the they doubts whether the current crop from Karnataka would be able to meet the contract specifications. |
| "The domestic crop has started coming in early this year thereby giving the market further boost. But we cannot change contract specifications once it is launched," said KR Kamath,head-clearing and settlement,Ncdex. |
| A section of market players suggested that as the penalty for non-delivery is also small, just 0.5 per cent on NCDEX and 1 per cent on MCX, there could be abundance of truants for the January contract. |
| In the crop year'05-06 (July-June), chana acreage is estimated at 72 lakh hectare compared with a normal average of 60 lakh hectare. |