Cardamom futures on MCX vs physical market

chethan

Cardamom futures prices on MCX and our local physical market prices have big difference - sometimes ₹200-300 per kg. Why is this gap? Which price should we follow for our trading decisions?

chethan

Reply by: SpiceBoardRep
MCX cardamom futures are based on specific delivery locations and quality specifications. Your local market may have different quality or location premium/discount. Also MCX is futures price for future month while local is spot price for immediate delivery. Some basis difference is normal. But if gap is too wide then arbitrage opportunity exists.

chethan

Reply by: Spice_Trader_Kochi
Actually cardamom futures volume on MCX is very low, barely 20-30 lots per day. With such low volume, prices dont reflect true demand-supply. Better to follow physical market prices in Kerala auctions - Kumily, Puttady etc. Those prices are more reliable because actual business happens there with hundreds of tonnes traded daily.