The Hindu Business Line : FCI trades wheat on CBOT, makes profit

FCI was given permission by the Union Government to hedge in wheat in view of rising domestic prices and fears that imports would have to be made to meet domestic demand.

The Food Ministry is reported to have taken the initiative and assigned FCI the job since the Union Government could not seen hedging in the global market. Also, CBOT was thought of as a better bet since any trading interest on the Centre's behalf in the domestic market could have led to sharp rise in prices.

FCI traded wheat futures through a broker and opened contracts in September for January delivery. It bought eight lakh tonnes. A few days ago, the corporation closed out its position.

As FCI had bought the wheat at a lower price and sold it at a high rate, it was able to make a small profit.

Through this, the Government-arm has got a feel and some experience in hedging. Global prices are ruling firm currently on projections of a lower output this year. Wheat production may decline 615 million tonnes this year compared with last year's 627 million tonnes.

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