The Hindu Business Line : Commodities futures gaining ground

FUTURES trading in wheat between December 13, 2003 and February 26 this year is at 89,000 tonnes valued at Rs 73.4 crore while that of rice during the same period is at 4,05,800 tonnes valued at Rs 400 crore.

According to a release issued by the Ministry of Consumer Affairs, Food & Public Distribution, value of trading in the exchanges in all commodities tripled from Rs 350 billion during 2001-2002 to over Rs 1 trillion in 2002-03.

Different projections by market participants have charted the frontier of commodity derivatives trading in the range of Rs 30 lakh crore to Rs 55 lakh crore within the next 5 years.

The total trading in all agriculture commodities during the financial year 2002-03 is estimated at Rs 1 lakh crore. This includes futures trading in gur at about Rs 15,000 crore, soya complex about Rs 70,000 crore; pepper about Rs 800 crore castor seed and oil about Rs 10,000 crore. Total trading during April 2003 to December 2003 is estimated at Rs 93,000 crore in all commodities.

The critical area of attention of the Government is on strengthening the commodity derivatives market regulator, the Forward Markets Commission.

Futures trading in wheat and rice was inaugurated by the Prime Minister, Mr A.B. Vajpayee, in the facilities extended by NMCE, Ahmedabad on December 13.

The Government permitted all commodities including metals like gold and silver for futures trading since April 2003. Three National Multi-Commodity Exchanges have been operationalised by December 2003, pursuant to the announcement of the Prime Minister on August 15, 2002.

National Multi-Commodity Exchange of India Ltd (NMCE) Ahmedabad, Multi-Commodity Exchange (MCX) Mumbai and National Commodity and Derivatives Exchange (NCDEX) Mumbai became operational in January, October and December 2003 respectively.