Coriander ‘cartel’ stuck as price falls 29% in a month

MUMBAI: An alleged cartel trying to corner shorts on coriander futures has been left badly mauled with prices having fallen 29% over the past month, claim a few commodity market brokers. The situation is similar to the castor fiasco of last year, they added.

The generic contract, which hit a 4% lower circuit two days in a row earlier this month, slipped below the Rs 5,000 a quintal mark to Rs 4,970 on Wednesday. The price of the active contract has plumbed 29% from Rs 6,956 in the past month through Wednesday. A Sebi official was not immediately available for comment.

Commodity exchange NCDEX, regulated by Sebi, has raised margins on shorts to prevent overexuberance. “This cartel was buying crop from the spot market and simultaneously taking buy positions on the futures market to squeeze sellers on anticipation of lower crop this year,” said one of the brokers.

“However, the shortfall from major producing states like Rajasthan and MP has been offset by better crop from Gujarat and higher imports from Russia and Ukraine leading to higher supplies in the market and sellers being able to deliver on the exchange.

Those trying to create a short squeeze are stuck.” A short squeeze works only if supplies are inadequate to meet buyers’ demand. In this case, normalising supply caught the alleged cartel (buyers) on the wrong foot. Supply is expected to be 5.85 lakh tonnes, in line with last year’s output.