Pepper turns hot, January contract hits upper circuit

MUMBAI: Monday saw pepper, urad and tur counters ringing at the Ncdex, which clocked volumes of Rs 2,769 crore (one way). Pepper, which had been falling for over a week, shot up across all the contracts with the benchmark January contract breaching the upper circuit of 4% to close at Rs 9,959 per quintal.

The open interest was down at 11,609 tonnes compared to Saturday, showing the shorts were covering their positions. The December contract, too, broke the upper circuit to close the day 4.3% higher at Rs 9,772 per quintal.

However, KP Krishnan of Geojit Commodities, said rather than any fundamental correction pepper witnessed a technical retracement. “Pepper had been falling over 10 days and a correction was expected. Also, short covering as the December contract nears expiry and speculative buying bolstered the contracts,” he said.

Another market source, who did not wish to be named, echoed this view as he said export demand was low and there were actually sellers in upcountry markets like Wayanad and Iduaki regions.

In urad, the benchmark January contract hit the upper circuit of 4.6% to close at Rs 3,293 per quintal. OI was 18,340 tonnes, up 1.2% over the previous trading session OI. Urad for December delivery was up 3.1% at Rs 3,434 while OI was 7,680 tonnes. When prices are rising, volumes and open interest are up the market is said to be strong.

A research analyst from Anand Rathi Commodities said that limited stock positions in the physical market were not enough to contain low prices. “Prices will rise in the near term and we expect the December contract, which breached the psychological barrier of Rs 3,400 to touch Rs 3,500,” he said. He added that sellers would come under pressure as quality of urad stocks at Ncdex was not considered up to the mark by traders and even Burmese urad had to be delivered at a discount of Rs 50 at the exchange warehouses. Urad spot price at the Jalgaon mandi was Rs 3,500 per quintal.

Tur also breached the upper circuit with the most active January contract zooming past the 4% circuit to touch a high of Rs 2,000 per quintal intraday. The contract finally ended the day 3.8% up at Rs 3,923 per quintal. OI was 13,290 tonnes, up 3.6% over the previous trading session.

Spot rate at the Akola mandi ranged from Rs 1900-1925 per quintal. However, Nilesh Veera, a trader from the APMC market in Navi Mumbai, said he had heard of no quality or quantity issues from traders in tur.