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    Cartel behind coriander dumping spree?

    Synopsis

    Futures price at Rs 5,860 per quintal is below the NCDEX polled spot price of Rs 6,087

    ET Bureau
    Mumbai | Kochi: What's behind the steep fall in coriander futures? If market sources are to be believed, a cartel has been dumping the commodity after being faced with margin calls.

    This has caused the active futures contract to hit the lower circuit for two straight sessions through Thursday. Attempts to contact Sebi officials for comment remained unanswered. “There has been a lot of selling pressure and even that has been difficult to execute over the past two sessions with the contract being locked at the lower circuit upon trade opening,“ said a trader from Gujarat, one of the three coriander producing states along with Rajasthan and MP.

    The active, May expiry futures on NCDEX hit the 4% lower circuit on Wednesday and Thursday with price having tumbled 8% over the two sessions. To create “orderly price discovery“ and prevent single-sided “exuberance“, NCDEX will impose a 7.5% margin on the short side in addition to existing special and additional margins on all running contracts from Friday, an exchange spokesperson told ET.

    So precipitous has been the fall that futures price at Rs 5,860 per quintal is below the NCDEX polled spot price of Rs 6,087. While a steep fall in prices benefits consumers, it hits farmers.

    Traders in the spot and futures markets said the problem lay with coriander being a narrow commodity, making it easily manipulable. They added that a cartel, expecting lower production, was attempting to squeeze shorts (sellers) by buying huge quantities of coriander from the physical market and simultaneously initiating long (buy) positions on the exchange. This was done with the intent to drive up prices and sell at a profit on the spot market, while squaring off the futures positions at huge gains.



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