FMC looking into pepper, cumin seed margins

The Forward Markets Commission (FMC), the commodity markets regulator, is considering revisiting the margins levied on cumin seed (jeera) and pepper which hampered traders' sentiment.

"We are looking into the jeera and pepper margins. But, the rise and fall in the volume and turnover of commodities depend upon their availability in the physical markets. Therefore, margins should not be blamed for a decline in volume and turnover of these two commodities on exchanges," said B C Khatua, the newly-appointed chairman of FMC, to mediapersons.

The June contract for cumin seed surged to Rs 12,883 per quintal on Tuesday, up Rs 478 over yesterday's price. The July contract went up by Rs 504 to Rs 13,306 per quintal, the August contract up Rs 487 to Rs 13,564 on Ncdex.

On MCX, an average rise was Rs 300 across all contracts. In April, the regulator has increased margins on pepper to 20 per cent for short and 25 per cent for long positions from 9.5 per cent and 11 per cent, respectively.

Effective June 16, further adding to the woes of investors, the FMC reduced the open position limits to 1,500 tonnes for members and 500 tonnes (earlier 3,000 tonnes) or 15 per cent of marketwide open interest, whichever was higher for members and 1,000 tonnes for clients.

The near-month position limits was also restricted to 300 tonnes for members and 100 tonnes for clients. Consequently, the pepper volume on MCX declined from 11,95,400 tonnes on March 29 to 1,100 tonnes on June 4.

Since March 29, when all these regulatory changes were effected, pepper volume on NCDEX was hovering at 4,001 tonnes which fell to 2,442 tonnes on June 4. Similarly, the volume of 1,352 tonnes on NMCE slumped to 416 tonnes between aforementioned dates.

The situation for cumin seed (jeera) was similar to that in pepper with the regulator's revision of margin to 20 per cent for short and 25 per cent to long position effective from April 16.

Jeera volume on MCX at 212,100 tonnes on March 29 drastically came down to 1200 tonnes on June 4 because of the lack of traders' interest.