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ASSOCHAM wants probe into price fluctuations

Posted on Nov 05, 09:03PM | UNI

Associated Chambers of Commerce and Industry of India (ASSOCHAM) today urged 'Forward Market Commission' to investigate the anomalous price changes and trade behavior found in pepper futures between June 2011 and March 2012.

The investigation has been necessitated as the just concluded study undertaken by the chamber has pointed out to insider trading by cartel leading to un-noticed price manipulation and huge suffering especially to farmers, an ASSOCHAM release said here today.

Chamber Secretary General, Mr D S Rawat while releasing the study said, 'the commodity exchanges must develop a regular system of monitoring price and trading behavior of commodities in order to avoid such episodes in future as even the cases of suicides have come to notice'.

The chamber study observed that the average price of black pepper was Rs 7,181 per quintal in 2004-05, which almost doubled in 5 years reaching Rs 13,748 in 2009-10.

However, in 2010-11, the average price stood at Rs. 20231 per quintal and rose further to Rs. 32,803 per quintal in 2011-12, with maximum being Rs 39,200 per quintal.

The maximum price went up from Rs. 25.053 per quintal in Rs.

2010-11 to Rs. 45,005 per quintal in 2011 - 12.

The price fluctuation in 2011 - 12 is also extremely high with a price range (different between maximum prices) of Rs. 19,563 for the year as compared to the range being less than Rs. 6,000 till 2009 - 10.

The trading volume has remained static in 2011-12.The number of structural breaks is unusually large, in this case.

Further, bivariate volatility spillovers are empirically confirmed between futures and sport market implying high volatility in futures market driving high volatility in spot market vice-versa.