| Dilip Kumar Jha / Mumbai February 24, 2006
The National Multi-Commodity Exchange of India Ltd (NMCE) will start psyllium seed (isabgul) contracts on March 5 in Unjha, Gujarat.
The isabgul futures trading would be allowed in per quintal basis for which tick size is fixed at 10 paise. As per the Forward Market Commission guidelines, the daily price fluctuation limit would be +/-4 per cent.
On the first day, daily price fluctuation will be controlled with reference to the opening price. If trading touches this price limit, it would be stopped for 15 minutes, whereafter the price limit would be extended by another +/-2 per cent.
No trade would be permitted during the day beyond the revised price limit of +/-6 per cent. On the second day of trade, the daily price fluctuation limit will depend on the spot price.
With delivery at Unjha (inclusive all services but excluding sales tax), isabgul would be acceptable in 75 kg bag but would be traded in per quintal basis on the platform. Due date is fixed on the 15 day of the delivery months.
The trade would be accepted with immature maximum three per cent red coloured seeds, one per cent of black and dead isabgul seeds, two per cent of foreign or organic seeds and five per cent with moisture.
The maximum 12 contracts would be possible in a year.
Initial margin for isabgul is six per cent while delivery period margin is 15 per cent. Limit on open position for clients is 200 metric tonne while for member is 1000 mt or 20 per cent the market-wide open position, whichever is higher.
Squaring up of position will be permitted between 12th and 15th of delivery month. No fresh positions building will be allowed. From 12th and 15th of delivery month, seller can tender warehouse receipt for settlement and warehouse receipt will be accepted for settlement at closing price of the previous day.
India is the only producer of isabgul. With an annual production of about 11 lakh bags in three states Gujarat (5 lakh bags), Rajasthan (5 lakh bags) and Madhya Pradesh (one lakh bag), the country exports about 95 per cent produce to countries like USA, Germany, Italy, Japan, Russia etc.
Isabgul is always in short supply as demand from pharma producers is increasing by the day.
"The production of isabgul is demand driven, every year about 12,00,000 gunny bags (each of 75 kg) of isabgul (approximately 90,000 tonnes) is required to meet the demand. It is generally used for the medical purposes," an NMCE source said.
Isabgul is an environmental sensitive crop. Various factors such as temperature, weather, irrigation facilities, clear sky etc affect the crop. Therefore the production of Isabgol varies every year. The production is estimated to go down by 50 per cent in Gujarat this year due to adverse weather conditions.
Recently, the price of isabgul surged by Rs 100-150 per bag to Rs 600 per bag due to less estimated production.
Cultivation begins in October and harvest is done in February-March. The peak trade period is between March and June. |