Agri-centric commodity exchanges witnessed a sharp decline in daily average turnover in August from July due to frequent action by the derivatives market regulator, the Forward Markets Commission (FMC).
This was on both the National Commodity & Derivatives Exchange (NCDEX) and ACE Derivatives & Commodity Exchange (Ace).
Data compiled by the BS Research Bureau showed daily average turnover of NCDEX dived 18.4 per cent to Rs 6,672.6 crore in August as compared to Rs 8,172.6 crore in July. Similarly, Kotak anchored Ace reported a 14.3 per cent fall in daily average turnover at Rs 800.6 crore in August versus Rs 934. 7 crore in July.
The drastic decline came at a time when overall turnover of all exchanges put together recorded a marginal fall of around one per cent at Rs 57,052.9 crore in August as compared to Rs 57,509.8 crore July.
“A sharp rise in commodity prices in July caused participation to increase on agri exchanges, but in August many crop-growing areas received good rainfall, which had an impact on participation,” said Naveen Mathur, associate director, commodities and currencies, at Angel Broking, a Mumbai-based firm.
The falling trend in turnover has continued in September. While NCDEX reported a daily average turnover at Rs 6,033.9 crore until September 7, Ace posted its average turnover at Rs 735.2 crore as on the same date. An NCDEX official attributed the fall to the monsoon revival, which reduced concerns on kharif crops. ACE Commodity Exchange refused to comment.
An analyst said, “Uncertainty has increased around agri commodities in the past two months due to frequent regulatory actions. However, a sharp spike in commodity prices raised turnover in July. Generally, participation in commodity exchanges increases with output concerns due to deficiency of rainfall.”
FMC had increased margins on wheat, castor seed, chana, potato, rapeseed, soybean, soyoil and sugar.
Retail participation has also been impacted due to this and other participants have also stayed on sidelines. According to a report by DSP Merrill Lynch, rural consumption of agri commodities was affected due to a price spurt.
On the other hand, in the past week, special margins have been reduced on potato and withdrawn from cottonseed oil cake and barley.