NCDEX lowers limits on wheat futures
In A continuation of its bid to bring down speculative activity in commodities exchange NCDEX has reduced position limits on wheat futures. Last Saturday, the exchange had raised the minimum total margin of wheat contract to 10% from 5%.
By TNN |
MUMBAI: In A continuation of its bid to bring down speculative activity in commodities exchange NCDEX has reduced position limits on wheat futures. Last Saturday, the exchange had raised the minimum total margin of wheat contract to 10% from 5%. For members the position has been reduced to 40 MT from 80 MT and for clients to 10,000 MT from 20,000 MT.
The near month position limit has been fixed at 8,000 MT for members against 16,000 MT and 2,000 MT against 4,000 MT for clients. Members and clients have been requested to reduce their limits in the respective contracts by the close of trading hours on June 29. The new reduced position limits will be applicable from June 30, ‘06.
Wheat is a sensitive commodity and the rise in prices has become a political issue. According to Kotak Commodity Services, as most of the positions on the July counter on NCDEX are a mix of both long and short positions the markets are likely to remain choppy with increased volatility. The target price for NCDEX July is Rs 835/838 a quintal.
Annual production of wheat stands between 72 and 75 million tonnes and industry expects that there will be a shortfall in rabi ‘06-07. To meet this shortfall and the concomitant supply-demand mismatch the government has decided to import additional stocks of wheat, said Suresh Nair, vice-president, Kotak Commodity Services.
The reduction in limits in the wheat contracts will check any undue build up of positions in the futures market and rise of futures prices which could affect the spot prices of wheat. Mr Nair said that the main role of the futures market was price discovery and a healthy futures market was essential to this role.
At NCDEX, 555 members (3,001 users) participated in trading on Wednesday up to 5 pm and volumes were Rs 4,077 crore (one-way). There were more than 109,340 trades put through by them. Active trades were high among others in chana, guarseed, wheat, chilli, gold and silver.
The near month position limit has been fixed at 8,000 MT for members against 16,000 MT and 2,000 MT against 4,000 MT for clients. Members and clients have been requested to reduce their limits in the respective contracts by the close of trading hours on June 29. The new reduced position limits will be applicable from June 30, ‘06.
Wheat is a sensitive commodity and the rise in prices has become a political issue. According to Kotak Commodity Services, as most of the positions on the July counter on NCDEX are a mix of both long and short positions the markets are likely to remain choppy with increased volatility. The target price for NCDEX July is Rs 835/838 a quintal.
Annual production of wheat stands between 72 and 75 million tonnes and industry expects that there will be a shortfall in rabi ‘06-07. To meet this shortfall and the concomitant supply-demand mismatch the government has decided to import additional stocks of wheat, said Suresh Nair, vice-president, Kotak Commodity Services.
The reduction in limits in the wheat contracts will check any undue build up of positions in the futures market and rise of futures prices which could affect the spot prices of wheat. Mr Nair said that the main role of the futures market was price discovery and a healthy futures market was essential to this role.
At NCDEX, 555 members (3,001 users) participated in trading on Wednesday up to 5 pm and volumes were Rs 4,077 crore (one-way). There were more than 109,340 trades put through by them. Active trades were high among others in chana, guarseed, wheat, chilli, gold and silver.
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