Futures not abetting rubber rally: NMCE

MUMBAI | KOCHI: Amid tyre manufacturers’ allegations that it was causing price inflation in rubber through unchecked speculation, Ahmedabad-based National Multi Commodity Exchange (NMCE) said open interest in the counter indicated a high-level participation by producers rather than unbridled speculative activity.

“Open interest (OI) stands at 10,581 tonne or 114% of daily trading volumes, which indicates a high level of participation by physical market constituents,” said Anil Mishra, MD & CEO of NMCE. “If the rubber counter was dominated by speculators, the OI would be just 10% to 15% of the volume as such traders tend to enter and exit a commodity at very small intervals.”

OI means an outstanding buy or sell position initiated on a futures market. A high OI to volume ratio indicates a high level of participation by hedgers. When speculators hold sway over a particular counter, the volumes rise but OI remains unchanged.

Pointing to the increased participation by farmers’ cooperatives like Thodupuzha Societies, Palakkad District Cooperative Society and Nafed, NMCE said it had seen a 123% year-on-year increase in the arrival of rubber at its warehouses.