Now castor, coriander futures under FMC lens

After imposing a slew of margins on various commodities last month, the Forward Markets Commission (FMC) has put castor and coriander under watch for further regulatory action.

According to sources, castor turned volatile despite imposition of margins a day before, following speculation about lack of rain in one of the major growing states, Gujarat.

Meanwhile, after potato, the commodities market regulator has restricted any fresh buy-sell or trading positions in near-month contracts of turmeric, expiring in August. “Turmeric arrivals were heavy last year and prices slumped. However, due to the long shelf life, traders had stocked on the crop and are now taking advantage of the high prices when the acreage has gone down compared to last year,” sources said.

The exchanges have also made it clear that if any gains are made in violation of the directives, the money will be credited to the investor protection fund and not to the trading member.

As part of regulatory action last month, FMC had increased the special cash margin on longs (buy positions) in turmeric contracts from 20 per cent to 40 per cent. To encourage better deliveries and to discourage sellers’ delivery default, the commodities regulator increased the pre-expiry margin from three per cent to five per cent per day and for seven days instead of five days prior to expiry of contracts in turmeric and cardamom.

However, turmeric prices continue to go up and are quoted at Rs 6,110-6,816 a quintal now. A month before, prices were Rs 4,100-4,300 a quintal and prior to regulatory curbs in the forms of special margins and delivery default margins, turmeric prices were Rs 5,926-6,260 a quintal.

Castor prices have firmed up to Rs 4,500-5,100 a quintal from Rs 3,350-3,500 since July. Prices of dhaniya or coriander, have increased from Rs 2,500 a quintal in July to Rs 2,892-2,900 now.

Sources said dhaniya and castor have been kept under watch since some trades indicate concentration of positions held, which might give rise to speculation, if not checked. In fact, in castor, FMC has already imposed a special margin. Even then, both the trading positions and prices do not seem to be moderating, sources said.

In castor, traders are betting on low crop estimates due to a dry spell in the major growing states of Karnataka, Maharastra and Gujarat. On the other hand, state government officials are of the view that farmers will now start castor cropping in areas where groundnut or soybean have failed. Therefore, there is no reason for the market to panic.

In fact, according to the fourth advance estimates released by the ministry of agriculture, castor seed is one of the few edible oil seeds in which the estimates are way above the target. As against a target of 1.392 million tonnes, the advance estimates indicate a production of 2.33 million tonnes.