MCX, NCDEX announce special margin on potato

Written by Press Trust of India | New Delhi | Updated: Jun 26 2009, 06:01am hrs
Commodity exchanges MCX and NCDEX have announced for the second time in as many months a special marginan amount traders have to pay for taking long-term positionsto contain price rise in potato futures. A special margin of 20% is levied on futures contracts in potato with effect from June 27, MCX and NCDEX said in separate circulars.

Both the exchanges had imposed 5% special margin on the same commodity last month. The new margins on potato futures (both Agra and Tarkeshwar varieties) will be collected in cash, the circulars said.

The measures were taken after potato prices in the futures market shot up significantly by more than two folds to Rs 1,170 a quintal in June from Rs 510 a quintal in January. According to the directive issued by commodity market regulator Forward Markets Commission (FMC), the special margin of 20% will be imposed on traders with long position on all the running contracts and the one yet to be launched.

Special margin is decided by the FMC to stop the speculative element in the futures market. After the announcement of the special margins by the bourses, potato futures (Agra variety) for July delivery on both the exchanges touched the lower circuit. On MCX and NCDEX, July contract was down by 3% at Rs 1,094 and Rs 1,088 per quintal respectively.

Analysts said potato prices in the futures market are rising following a sharp decline in output in West Bengal.

The country is estimated to have produced 26 million tonne of potato in 2008-09 compared with 30 million tonne in a year-ago period. PTI