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Pratim Ranjan Bose

Kolkata , July 14

Controversy on the role of futures trading in the light of recent spurt in wheat prices seems to have taken the wind out of proposed forward contracts on onions.

NCDEX, which had announced launch of onion contracts on July 7, has reportedly put the decision on hold.

MCX, which was equally bullish on such contracts and secured necessary approvals from the Forward Markets Commission (FMC), has also backtracked.

While the NCDEX has informed the broker members that non-availability of some regulatory approvals had forced the exchange to postpone the launch, sources said both the exchanges were informally advised to keep away from the potentially "politically hot" commodity to avoid further controversy.

The MCX, obviously, was not required to explain its position to broker-members as it had not announced the launch.

Both the exchanges remained silent on the issue when contacted by Business Line.

Price crash

Onion prices have plummeted to an unprecedented low of 50 paise a kg in Maharashtra this year due to a bumper crop.

The crash in prices had reportedly resulted in a few suicide deaths of farmers too. As a part of various measures considered to help farmers, the FMC had listed the onion for futures trading in May this year.

Though market sources admit that future contracts may be subjected to price manipulation in the absence of a transparent integrated spot markets, they believe that blaming commodity futures for the price rise is more of an exaggeration.

According to them, stagnating production and increasing consumption have led to a demand-supply gap in the market place and the futures markets only served the purpose of helping create national price benchmarks.

More Stories on : Horticulture/Fruits & Vegetables | Commodity Exchanges

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Futures trouble — NCDEX, MCX backtrack on onion trading

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