Pepper traders in a spot

The Saturday's 'technical snag' on the NCDEX gripped the black pepper market on Monday, with all the futures contracts turning highly volatile.

The snag "� rumours of a payment crisis on the NCDEX have been doing the rounds "� has eroded the confidence of the market, despite many global conditions working in favour of the domestic pepper market.

The futures price tags have been eroded by 25 to 30 per cent within the last three trading sessions, one of the heaviest during the last 12 months, according to an exporter.

The spot prices of ungarbled pepper lost almost Rs 1,000 per quintal, quoting at Rs 10,600 a quintal compared with Rs 11,400 a quintal on Thursday. The garbled price remained steady at Rs 11,200 a quintal. An exporter blamed the planned speculative trading on the NCDEX as the sole reason for the current crisis in the black pepper market.

"We have lost our confidence in the futures market. We had been expecting a drop in prices for quiet a long period, but not such a big crash. The market is highly volatile today and we are in a difficult spot to foresee the movement of the market. Instead of price discovery, we are seeing price destruction in the futures trading," lamented a grower from Wynad.

Growers pointed out that inadequacy of legislation and incapability of FMC as causes for such price manipulation.

The domestic market was fully poised for a rally in the next two months with the country emerging as the single largest favoured destination for black pepper.

But the speculative trading on futures market and the rumours of a payment crisis have affected the export market badly.India has been offering the lowest price tag in the global market at $2,700 a tonne, while Brazil offers the same price for BASTA.

Vietnam, which has to wait for another 12 to 14 weeks for the new crop, is offering $2,600 for 500 gmiter and $2,700 for 550 gmiter, without any indication for ASTA grade. Sri Lanka too is not vibrant in the export market currently.

The global conditions are absolutely in favour of India. But, the planned speculative trading in futures trading has spoilt the party, said a trader.

The growers and traders here do not believe that the three-hour halt of trading on NCDEX on Saturday was owing to a technical snag.

They have demanded a complete revamp of the system and an immediate legislation to empower FMC in line with Sebi.