Business Daily from THE HINDU group of publications
Sunday, Jul 19, 2009
ePaper | Mobile/PDA Version | Audio | Blogs
Business Daily from THE HINDU group of publications Sunday, Jul 19, 2009 ePaper | Mobile/PDA Version | Audio | Blogs |
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Agri-Biz & Commodities
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Commodity Exchanges Govt can tap futures to control prices: NCDEX With wheat prices recently hitting a new high, market participants fear that the Government may ban the recently reintroduced wheat futures. Suresh P. Iyengar Mumbai, July 19 The Centre should consider tapping the futures market to control prices if it thinks that futures are driving up spot prices, said Mr Madan Sabnavis, Chief Economist, NCDEX. Though the Government has banned futures in sugar, tur, urad, rice, the prices have not come down. New highWith wheat prices recently hitting a new high despite a bumper crop, the market participants fear that the Government may ban the recently re-introduced wheat futures. It had banned wheat exports in 2007 after prices skyrocketed stoking up concern over food inflation. Queried on wheat export ban, Mr Sabnavis said: “I sincerely feel that the Food Corporation of India (FCI) should offload a part of its wheat inventory on the exchange at frequent intervals to send a strong signal to the spot market.” FCI has all the expertise to trade on the futures market as it already takes position in Chicago Board of Trade. Once government agencies tap the futures market it will become the global benchmark for price discovery. “In fact, we had submitted a paper to the Planning Commission some time back,” he said. Government appointed agencies bought the bulk of the bumper harvest in 2009 at the minimum support price of Rs 1,080 a quintal in the main producing states in north India. SurplusThe Government is struggling to manage a huge surplus of wheat after the government agencies raised purchases to more than 25 million tonnes (mt) in 2009, exceeding last year’s record procurement of 22.7 mt. Wheat stocks with state-run procurement agency FCI surged to about 33 mt on July 1 nearly double the buffer stock norm of 17 mt. “Wheat exports were recently banned. Traders fear that futures trading in chana may be suspended as the prices have recently appreciated sharply on fears of drop in output due to scanty rainfall. There is lot of uncertainty as far as agriculture futures are concerned,” said a head of research in a broking firm. More Stories on : Commodity Exchanges | Commodities
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