NCDEX to help castor seed traders sell on its e-spot exchange

About 165,000 tonnes of castor seed worth Rs 495 cr lying with warehouses as of Jan 27

The National Commodity & Derivatives Exchange (NCDEX) plans to assist castor seed traders in liquidating their stocks through its spot market arm, NCDEX e Markets Ltd (NeML).

NCDEX suspended futures trading in castor seed on January 27, saying this was to maintain market equilibrium, safeguard market integrity and in the general interest.

According to trade sources, around 165,000 tonnes worth Rs 495 crore of the oilseed was in various NCDEX-registered warehouses at that data. Owing to falling prices, traders haven’t lifted these.

"The quantity deposited in NCDEX registered warehouses needs to be liquidated. We would assist traders in liquidating their stocks through our spot arm NeML," said a senior exchange official on the sidelines of a seminar "Commodity Risk management for Indian Banks" organised by the Confederation of Indian Industry (CII) here on Thursday.

For all running contracts of castor seed on January 27, total quantity in open interest was recorded at 434,000 tonnes and 283,260 tonnes for all running contracts and near month (February) contract respectively.

Through NeML, traders can liquidate their entire holding in a phased manner, instead of carrying the entire quantity at one go to the physical markets for selling. Selling through a spot exchange might yield better realisation than transporting entire quantity to physical markets on one occasion.

With around 700,000 - 800,000 tonnes of castor seed left unsold elsewhere in the market, finding buyers at this point in time looks difficult. Assuming the crop sise of 1.2-1.3 million tonnes for the next year, castor seed price might worsen going forward.