Futures mkt discounts crop prospects

NEW DELHI: The commodity futures market, considered as a platform for price discovery, seems to have so far discounted the prospect of good agricultural production this year as rates quoted for October-November contracts are ruling higher than the current level for most items.

According to traders, generally the rates quoted under future contracts remain lower when supply is expected to increase.

But leading commodity exchanges, NCDEX and MCX, show that speculators, traders and hedgers are quoting higher prices from the current rate for most of the products to be delivered three or four months from now.

Government data shows that acreage of most of the crops has increased in the ongoing kharif season, compared to the year-ago period, which means a better output provided weather conditions remain conducive.

Futures prices of November and December delivery of groundnut at NCDEX are higher than the current level even as the acreage under it is up by 10 per cent this year as on August 3.

Groundnut (in shell) November contract at the exchange is up by about two per cent at Rs 580.55 per 20 kg from Rs 569.95 August delivery level. The September contract is ruling at Rs 573.50 per 20 kg, while the October delivery at Rs 576.85 per 20 kg.

In soyabean, however, the market sentiment is weak. Futures prices at NCDEX for December contract is ruling at Rs 1,512.50 per quintal of the commodity from the August delivery of Rs 1,555.50 a quintal.

"Soyabean is an exception as its prices are dependent on the domestic soya oil price, which is again influenced by the quantity of imports and global prices," a wholesale edible oil trader said.