NCDEX relaunches castor futures from today

Mumbai: After being suspended for nearly a year, trading in castor seed is set to be relaunched on the National Commodity and Derivatives Exchange ( NCDEX) from Thursday. The contracts were suspended from trading in January last year after castor futures plunged 10% in three days on trade expectations of a higher than anticipated crop.

Many investors in castor had accumulated huge stocks on hopes that a shortfall in production would boost prices. They had sought finance against the stocks at a 2530% haircut from large financiers. However, estimates of supply well exceeding demand last year, pressuring prices downwards.

This led to financiers making margin calls on their borrowers, who, in turn, were forced to unwind their long positions on the exchange, causing prices to hit the lower circuit.

Castor seed contract expiring in February, March 2017, April and May 2017 would be available for trading from January 5, 2017. “It is heartening to have the regulators' confidence and the support of market participants. We have strengthened risk management framework under the guidance of Sebi and we look forward to the successful re-launch of castor seed contact,“ said Samir Shah, CEO of NCDEX.