Soyabean continued to decline on fears that the Forward Markets Commission will crack-down on speculation.
The FMC has in fact doubled the margin money investors have to pay for buying futures. The hike will come into effect tomorrow.
Besides rains in the growing areas of Madhya Pradesh have resulted in the acreage under soyabean increasing to 102 lakh hectares.
According to Mr Rajesh Aggarwal, spokesperson of the Soyabean Processing Association, the acreage is likely to increase by 2-3 lakh hectares given the monsoon showers in the growing areas.
All these factors have combined to trigger profit-booking sales by traders.
August futures were down Rs 40 and were quoting at Rs 4,434 for a quintal on the National Commodities Exchange of India. The October contract was down by Rs 34 at Rs 3,939 and the November contract by Rs 25 at Rs 3,768. The December contract declined by a similar margin to quote at Rs 3,780.
In the spot in Indore, the commodity quoted lower at Rs 4,592 for a quintal.
Keywords: Soyabean futures down, FMC, margin money, Madhya Pradesh, spot market, Indore, NCDEX, Mr Rajesh Aggarwal
Comments:
While increasing margin is healthy, as it would restrain
financialisation of the commodity market, what is worrisome is the
tendance on the part of the Forward Markets Commission to impose such
margins only on buyers. No one can buy unless the seller is willing to
sell. Hence by creating unlevel playing field, the FMC is only creating
breeding ground for malpractices like insider trading in commodity
markets. More importantly, how can futures market make efficient price
discovery if such distortions are created by the regulator?
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