The Hindu Business Line : Wheat, rice futures freeze: `A preventive step'

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Wheat, rice futures freeze: `A preventive step'

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Mumbai March 1 The Centre's decision to suspend forward trade in wheat and rice is a preventive step, rather than a reaction to developments in the market, according to an official of a multi-national firm.

"It is a retrogressive move in this day and age" said the chief of a multinational company.

Another multinational company has interpreted the measure to facilitate procurement by the Food Corporation of India (FCI). In the absence of price discovery, farmers would sell their produce to the Government.

Sharing a similar view, Mr Anjani Sinha, Director, MCX, said: "De-listing of wheat and rice futures is sought as a precautionary measure. It might have been taken to facilitate procurement by FCI. However, we will present our view to the expert committee set up by the Centre and say Government agencies such as FCI should be allowed to hedge their risk in futures markets before procuring from the open markets."

Interference without strong reasons, proceeding on a vague belief that futures' trading is the cause of price rise erodes market confidence, he added.

For that matter inflation is due to levy on services, he argued.

There are operational difficulties in implementing the decision to de-list wheat futures, as the investors would not be able to liquidate positions. "But we are in the process of finding out a solution. NCDEX futures prices on agro commodities have been taken as benchmark by the Government for policy decision. Now, with the absence of futures trading in wheat, the Government may not be able to get signals on future trend," said Ms Sanvali Kaushik, Vice-President (Products), NCDEX.

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