FMC may try to reduce intra-day price fluctuation in rubber
The commodity market regulator, Forward Markets Commission (FMC), may consider bringing down the intra-day price fluctuation in natural rubber futures to 2% from existing 4% limit.
By NIDHI SHARMA, TNN |
MUMBAI: The commodity market regulator, Forward Markets Commission (FMC), may consider bringing down the intra-day price fluctuation in natural rubber futures to 2% from existing 4% limit.
FMC chairman BC Khatua told ET that they have received a letter in this regard from the Rubber Board chairman which is being examined and if there is merit it may be consider. “The Rubber Board chairman said that since the price volatility in physical market is not much and is between one and two per cent there is no need for a higher volatility in futures market,” Mr Khatua said.
Mr Khatua said that volatility in rubber prices may be a cause of concern but not futures trading in the commodity. “There may be a strong cash market in the commodity but for hedging and price discovery at a more later stages there is need for futures market,” he said.
Rubber Board chairman Sajan Peter, who was in city to attend the AGM of All India Rubber Industries Association said that futures are essential for price discovery but in rubber, few stockists got together and per day fluctuations could have been extended up to beyond 4% which is too much. “In rubber where farmers get more than 90% of the declared price the role of futures trading is limited,” the Rubber Board chief said.
Mr Peter said that the domestic prices had been low in comparison to international prices during the five years after lifting the quantitative restrictions and the sharp increase in domestic natural rubber price during peak production times between October 2006 and January 2007 was due to speculation. Natural rubber prices peaked to Rs 100 per kg levels during this period, while the price usually remains at Rs 60-Rs 70 levels during the peak production period.
FMC chairman BC Khatua told ET that they have received a letter in this regard from the Rubber Board chairman which is being examined and if there is merit it may be consider. “The Rubber Board chairman said that since the price volatility in physical market is not much and is between one and two per cent there is no need for a higher volatility in futures market,” Mr Khatua said.
Mr Khatua said that volatility in rubber prices may be a cause of concern but not futures trading in the commodity. “There may be a strong cash market in the commodity but for hedging and price discovery at a more later stages there is need for futures market,” he said.
Rubber Board chairman Sajan Peter, who was in city to attend the AGM of All India Rubber Industries Association said that futures are essential for price discovery but in rubber, few stockists got together and per day fluctuations could have been extended up to beyond 4% which is too much. “In rubber where farmers get more than 90% of the declared price the role of futures trading is limited,” the Rubber Board chief said.
Mr Peter said that the domestic prices had been low in comparison to international prices during the five years after lifting the quantitative restrictions and the sharp increase in domestic natural rubber price during peak production times between October 2006 and January 2007 was due to speculation. Natural rubber prices peaked to Rs 100 per kg levels during this period, while the price usually remains at Rs 60-Rs 70 levels during the peak production period.
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Rubber trader Bijosh P Thomas said that even by this time the prices should have been down but they are ruling at Rs 90 levels due to speculation in the current month contract. “In the international futures market there is less trading in near month and more in far months. In India it is other way round which affects the dealers, planters and traders,” Mr Thomas said, adding that trading in current month should be abolished.Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
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