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K.V. Kurmanath

`Demand, supply behind inflation'

Hyderabad May 3 Rebutting criticism that futures markets are causing escalation of prices in certain commodities, Mr Anjani Sinha, Director of Multi Commodity Exchange, has said the markets would have no impact on prices. "The markets don't contribute to raise or fall of prices in the open market," he said.

Giving an example, he said that prices of sugar, which were ruling at Rs 2,200-Rs 2,300 a quintal last year, had come down significantly this year. On the other hand, prices of wheat (trading of which was banned by the Government early this year) and some pulses had gone up.

While this was the case with the agricultural commodities that were in the trading list, those, which were not covered in the list, like onions and moong dal too showed a sharp increase. "Prices of commodities are influenced by demand and supply. Markets do not determine the prices," he explained.

Mr Sinha, who is also Managing Director and Chief Executive Officer of National Spot Exchange Limited (NSEL), was here to take part in an awareness programme on the futures markets.

`Warning signals'

In fact, futures markets could help governments in taking up corrective measures well in advance. "The future market gives you an indication on the shape of things to come as it indulges in future volumes in specific commodities," he said. "If you don't react (to warning signals), then the problem starts," he said.

With the organised retailing witnessing a big boom, major players such as Reliance, Pantaloon and ITC have begun futures in potatoes, Mr Sinha said. This enabled the retail players assured quantities, quality products and shield against price hikes.

He said the exchange was going to have tie-ups with all leading global exchanges. "We have already entered into agreements with London Metal Exchange and Chicago Climate Exchange," he said.

He said biggest challenges for the growth of commodity markets in the country were lack of knowledge and rural infrastructure.

Barley, coriander futures soon

The Multi Commodity Exchange (MCX) is likely to start futures trading in barley and coriander soon.

"We are looking at including these two commodities in the next few months," Mr Anjani Sinha, Director of MCX told Business Line.

The MCX has initiated research work into various issues with regard to introduction of barley and coriander.

Asked what's the kind of volumes of trade it was looking at in these commodities, he said, "it is too early to talk on volumes as we haven't yet concluded our research".

More Stories on : Commodity Exchanges | Commodities | Economy

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Futures not behind rise in commodity prices: MCX official

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