Fragmentation in marketsEven as commodity futures markets reach the takeoff stage, there are fears that the tendency to have separate exchanges for each commodity could lead to fragmentation and sub-optimal use of facilities. Dr Ajay Shah, professor with the Indira Gandhi Institute of Development Research, sees a problem with setting up small exchanges. Trading volumes are small and the revenue stream is small, leading to a lack of resources for exchanges to fund developmental work. If a new futures market is set up for each commodity, then each of them may be unviable.
New edge in food-grade jute bags
The successful workshop organised by the International Jute Organisation in Calcutta on hydrocarbon-free jute bags is likely to fetch the Indian jute industry a global market of about Rs 260 crore, which is more than 25 per cent of its existing exports. The workshop, attended by cocoa, coffee and jute-producing countries, apart from the consuming nations of Europe and America, helpedestablish the international standard specifications for jute bags used in the packaging of food-grade materials.Cotton yarn exports weakening
For cotton textile mills engaged in exports, there were reasons to be jubilant about 1997. Most of them had improved their bottomlines following subdued cotton prices, a more liberal export policy and better export orders. However, alarm bells have started ringing following the recent decline in cotton yarn export to south-east Asian countries due to the currency turmoil there.Sacking futures gets nod
The department of consumer affairs under the Union ministry of food and consumer affairs has given the final nod to The East India Jute & Hessian Exchange to resume futures trading in jute sackings. However, futures trading in raw jute still faces stiff opposition from the state government's agricultural department, and is unlikely to see the light of the day in the near future. Separate trademark for Darjeeling tea
Darjeeling's tea producers areplanning to obtain a geographical patent for their "champagne of teas" at the earliest. With India still to enact a Geographic Appellation Bill, products unique to India are in a vulnerable position as they cannot claim reciprocal protection in WTO countries under the Trips agreement.Slowdown in coffee area extension
Trends in coffee cultivation over the last few years suggest that the area under coffee has more or less been stagnant over the 1990s. If this trend continues, in due course the land under coffee cultivation may actually witness a negative growth rate. Growers in Karnataka's Chickmagalur district say that newcomers are not willing to take up the risks involved in coffee growing.
No end to rubber crisis
There seems to be no end to the rubber crisis even as several agencies appointed by the Union and state governments are engaged in the procurement of all varieties of rubber, especially RSS-4 grade and RSS-5. Among the major factors that have led to the fall in rubber priceswere the exim policies of the centre, which allowed the import of used rubber tyres and rubber, the recession in the automotive sector and the general decline in industrial growth.
Guatemalan challenge for cardamom
Cardamom-growers in Kerala are facing doom due to severe price undercutting and rampant smuggling of Guatemalan cardamom. While growers estimate that about 3,000 tonnes of Guatemalan cardamom is being smuggled into India annually, neither the Spices Board nor the union commerce ministry has any idea of the actual quantum involved in these operations.
Sharp rise in mustard oil prices likely
Mustard oil prices are expected to hit an all-time high in June-July this year because of short supply in the market. Prices are now ruling at around Rs 3,700 per quintal. Production of this major edible oil is likely to decline by around three to five per cent, because unseasonal rain and cloudy weather in December 1997 and January this year is expected to lead to a fall in the oil contentof mustardseed.Portents for crude-oil prices
The US-Iraq faceoff in the Gulf has increased uncertainties about crude oil prices. But experts say that barring a minor blip, India need not worry. They dismiss possibilities of a recurrence of an oil crisis as seen in the early part of this decade since the recent fall in oil prices has been prompted not only by an increase in production, but also by a drop in demand. A mild winter in Europe and the Asian currency crisis has created an oil-choked market.
Overcapacity in cypermethrin
The market for cypermethrin, used in cotton pesticides, went through a rough patch in 1996-97 essentially due to overcapacity and tremendous competition on the pricing front. Industry sources say that cut-throat competition saw cypermethrin (technical) prices fall by over 36 per cent.
In 1996, cypermethrin prices were in the region of Rs 1,100 per kg but fell to almost Rs 700 per kg in 1997. Cypermethrin formulation prices also fell from Rs 250 per litre in 1996to Rs 220 in 1997. The price war has also shifted to the export front with Indian exporters playing a key role in determining international prices.
Basmati exporters get wakeup call
The recent granting of process patents to US company Ricetec has jolted Indian officialdom out of inaction. Not because the US is a very large market for basmati, but because this could lead to a slow throttling of all traditional Indian exports. The US patent does not specifically allow Ricetec's rice to be sold as basmati, but that is a battle still to be won for Indian exporters of basmati.
Outlook for aluminium industry
The outlook for world aluminium prices in the first six months of 1998, with demand remaining weak, will be flat but the current negative sentiment surrounding Asia appears to be overdone and there will be some degree of export-led recovery. Speakers at the recent aluminium conference held in Delhi said that the demand in Asia will recover in the second half of the year to some degree.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
