Within days of launch, Paddy 1121 contract hits lower circuit on ICEX

In today’s early morning trade the ICEX (Indian Commodity Exchange) paddy 1121 contract had hit the lower circuit of the daily price limit filter and was down by over 3% to trade at Rs 3865 per quintal. The paddy 1121 grade contracts were launched on ICEX platform on July 11, 2019.

There are two main reasons for the fall in rates.The rainfall has picked up in the key sowing areas of Haryana and has led to increased sowing of paddy. There is a general expectation that the 1121 paddy crop will be on the higher side during the present crop year owing to improvement in the rainfall in the key sowing areas on Punjab and Haryana which led to teh fall in prices.

Further, there was also the news that the seizure of a British tanker off the Persian Gulf by Iran could lead to further standoff between Iran and the western world leading to lower than expected demand from Iran for basmati rice imports from India. As Iran was the number one destination for Indian Basmati rice exports in last financial year, the lower demand for basmati rice from Iran could also mean lower demand for the key rice making raw material - paddy.