Pepper exchange firm on going online

Ajayan

Kochi, Dec 9: The pepper exchange here appears firm on going ahead with its plans to go online. Indian Pepper and Spices Trade Association president Kishor Shamji told The Financial Express that the association has set up a committee to look into the exchange’s going in for online trading and would be submitting its report very soon. The board, which met two days ago, had decided in principle to go online at the earliest.

While, IPSTA had shortlisted four companies for preaparing for online trade, a fifth company has come in with a new proposal. IPSTA sources said the company would be making a presentation on Tuesday. It was the cost factor that had been standing in the way of the exchange going online.

Talks were also on with the Bombay Commodities Exchange (BCE) which had gone in for web-enabled screen-based trading. BCE officials are said to be in Kochi discussing the matter with the association officials.

However, sources said the BCE rates quoted were pretty high. For one-side trade, it is believed that the exchange has demanded Rs 14. They are willing to bring it down to Rs 4. But the catch is that the term of contract would be for one month. This does not seem to go well with the association which aims at a minimum three-year contract.

The sources said that experience of the Cofei in Bangalore was a case in point. With the one-year contract with VSAT technology coming to an end in October, the exchange had to go back to the traditional outcry system.

It was important that the term of contract was at least for a minimum three-year term, Mr Shamji said. The high cost involved for going online and the resultant high outright investment had made the exchange try for newer and cheaper options. With several companies now coming in with new and cheap solutions, the association would look into the different aspects before taking the plunge, he added.

Meanwhile, the market was facing a situation of low volumes. Of late the margins had been slightly going up. They had fallen from Rs 600 per quintal to Rs 400 but had started picking up. Trade was slightly picking up. This was mainly because the Indonesian market had dried up and the world market was looking up to India where the harvest had just begun. However, the harvest here was expected to be delayed by 5-7 weeks. This was because of the cloudy weather and the rains in the South. Last year the harvest had started around October.

But with the prices on the decline, there was selective harvest going on. Only those varieties that would fetch a better price were being plucked. This selective plucking had led to lesser quantity coming into the market. There was also pressure due to the internal demand. This had also posed problems as very little of this would come to the market. The newly harvested varieties had not been dried and had higher moisture content.

As a result they were heavier and most of the traders had taken to transporting the commodity by train which was cheaper.

As a result more of the commodity was being smuggled out of the market and taxes were being evaded.

This had been posing problems to those trading through the terminal market.