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Gargi Shah

Mumbai, Dec. 3 The final report from Indian Institute of Management, Bangalore (IIM-B) on the impact of futures trading in foodgrains is expected to be submitted this month.

After the ban was imposed in wheat, rice, tur and urad last year, the Forward Market Commission (FMC) had appointed IIM Bangalore to study the impact of futures prices on physical prices of these commodities.

The interim report submitted by the institute said there was no correlation between inflation and futures trading.

The lifting of ban in wheat futures is faced with reservations.

The Forward Market Commission is collecting all the evidences that are supportive of the fact that futures’ trading is not responsible for rise in the prices of the physical commodities.

There has been demand from the trade and the commodity exchanges to allow futures trading in all the four commodities that have been banned as the new season has begun, said Mr B. C. Khatua, Chairman of the Commission.

“It is extremely imperative that with the global wheat scenario and growing volatility in prices of wheat, futures trading are re-introduced,” said Mr P. H. Ravikumar, Managing Director & CEO of National Commodity & Derivatives Exchange Ltd.

After the ban was imposed, the prices have not only increased in the domestic markets but also globally, said a trader.

There is something called demand and supply, he said adding that the ban had not helped in any way.

Fundamentally, there should be futures trading, said a senior from a multi-national company. “But what is the guarantee that they will not impose a ban again after lifting it?” wondered a chief of a multinational company.

“We will trade if the ban is lifted to hedge our price risk but it may be limited and we will be cautious,” he added.

“We are also a nascent market and despite being the second largest wheat producer with 70-75 million tonnes annual production, the opening volume on the exchange was a mere 80,000 tonnes,” he added.

More Stories on : Commodity Markets | Commodity Exchanges | Foodgrains

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