Mr. Ritesh Kumar Sahu (Fundamental Analyst - Agri Commodities, Angel Commodities Broking):
"On the first day of trading, Pepper futures fell in the early trade today on expectation of higher supplies of pepper in the domestic from the imports. According to the market sources, pepper is mostly imported from Vietnam via Sri Lanka due to lower duty structure under South Asian free trade. There is a huge difference in prices between domestic prices and import prices of Vietnam pepper which encouraged Indian importers to import in huge volumes.
The benchmark pepper contract for September delivery on the Multi Commodity Exchange (MCX) and National Commodities and Derivative Exchange (NCDEX) down by Rs. 3,055 per quintal and Rs. 2,915 per quintal respectively from its open price, that is more than 6% percent lower at the close of trade. On MCX, pepper September delivery closed at Rs. 48,690 per quintal while the last traded price at NCDEX was Rs. 47,065 per quintal.
Though the Daily Price limit (DPL) for any agri commodities should not more than 4% at any given day, but in case of first trading day of the contract, Exchanges are allow to calculate the base price of the commodity on the basis of Volume Weighted Average Price (VWAP) of the first half an hour, subject to minimum of ten trades.
On the basis of base price, the DPL limit of (+/-) 3% is calculated first. Once the 3% limit is reached, then after a period of 15 minutes this limit is increased further by 1%. The trading shall be permitted during the 15 minutes period within the 3% limit. After the DPL is enhanced, trades shall be permitted throughout the day within the enhanced total DPL of 4%."