Mumbai July 25, 2008, 0:54 IST
Strengthening its foothold in agri-commodities after the success of non-agri futures, the country's largest commodity bourse, the Multi Commodity Exchange (MCX), is all set to launch coriander seed (coriander) futures on July 28.
The whole machine-cleaned variety of Badami coriander will be delivered at ex-Kota mandi with base price quoted in rupees per quintal inclusive of all taxes and expenses but excluding value-added tax (VAT).
BETTER PROSPECTS
Year Domestic output (in lakh bags) Carry forward (in lakh bags) Price (Rs per kg)
2005-------------70-----------------35-------------25.50
2006-------------60-----------------35-------------30.00
2007--------------40-----------------30------------34.50
2008---------------40----------------5------------62.00
1 bag = 40 kgs
Initially, trading will be available for three months for delivery in September, October and November with a lot size of 10 tonnes and margins of 7 per cent.
Daily price variation and tick size is fixed at 6 per cent and Re 1 respectively. Open position limit for clients and members is fixed at 1,000 tonnes and 3,000 tonnes. It is 12-month compulsory delivery contract.
India is the largest producer of this four-month rabi crop, which is suitable for intercropping also. The sowing begins in October while harvesting begins early February.
The launch of coriander completes the spices family as other major products such as red chilli, black pepper and cumin are already available for online futures trading.
With an annual output of 350,000 tonnes, India contributes about 60 per cent of the world output. The country exports about 15 per cent of its annual output to the Middle East. Other major producing nations include Morocco, Turkey, Iran, China and Somalia.
In India, Rajasthan, Madhya Pradesh, Andhra Pradesh and Bihar are the major producing states while the southern states are the important consumers.
The crop failure in some parts of the country has affected supply.
Consequently, spot prices have almost doubled to Rs 80-85 a kg on Thursday from Rs 40-42 a kg two months ago. Prices are set to keep rising as fresh crops will arive only eight months later.
‘No more curbs on futures' Reuters adds, India has no plans to curb futures trading in more commodities and is likely to lift a ban on four items in September, the market regulator Forward Markets Commission (FMC) said, despite a report recommending futures should be discouraged.
In May, the government, under pressure from its allies to control soaring inflation, suspended futures trading in soyoil, potato, rubber and chickpea for four months.
However, Agriculture Minister Sharad Pawar and an official panel probing the impact of futures trading on commodity prices said then there was no clear link between the two. Commodity prices had risen despite the futures ban, B C Khatua, chairman, FMC, said on Wednesday.
The government usually consults the FMC before taking any decision on commodity derivatives.
"It has already been established that there is no link between futures trade and price rise," Khatua, also a senior government official, said, adding the ban on the four commodities was likely to be lifted in September."
India suspended futures in wheat, rice and two varieties of lentils in early 2007.
A cross-party panel of MPs said in a report presented to parliament on Tuesday that futures trading in agricultural commodities should be "discouraged" to contain speculation, which it said generally resulted in an artificial rise in prices.
Government officials also said the issue of banning futures came under the purview of the Consumer Affairs Ministry, which gets advice on policy issues from a different panel of lawmakers.
But commodity futures fell sharply on recommendations of the Standing Committee on Agriculture.
Khatua said the FMC has initiated a series of steps to make commodity derivatives transparent.
"In the absence of futures in commodities, farmers will have no clue about impending price movement. Farmers are losing due to restrictions on futures," Khatua said.
Early this year, India approved turning the FMC into an independent body with powers to actively police a market that has grown rapidly since futures trading was first introduced in 2002.
But parliament is yet to approve a bill to make the FMC an independent body like the stock marker regulator.
The FMC currently needs to seek permission from the Consumer Affairs Ministry for many decisions.
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