| Newswire18 / Mumbai May 13, 2008, 2:35 IST
In the aftermath of the four-month suspension of futures trading in chana, soyoil, rubber and potato imposed on Wednesday, Forwards Markets Commission Chairman B C Khatua on Monday said that the ban did not indicate the commodities were responsible for higher inflation.
It was a move just to "dampen inflationary price expectation in the future," he said.
"I can understand that high chana and soyoil prices may have led to a suspension of these futures. However, I can't see the economic rationale behind the suspension of rubber and potato futures trade," he said.
For rubber, he claimed that domestic spot and futures prices were in line with global prices and closely tracked crude oil. Also, the Abhijit Sen Committee had found that high incidence of hedging by National Agricultural Cooperative Marketing Federation, farmer cooperatives and producers. The contract had also witnessed high deliveries.
"Our campaign for a more inclusive futures market where it would serve as a means for price discovery was singularly successful in rubber and I can't fathom why it has been suspended," he said.
He also said the government's move to ban potato futures trade was likely to sharply hit the farming community that has been struggling under the impact of low prices this year.
"Today, retail potato prices are sharply down at Rs 6-8 per kg from Rs 25-30 last year, so I am not sure why the government suspended the contract," Khatua said. He hoped that the contracts would automatically be available for futures trading after four months unless the suspension was extended.
"If there is no case to indefinitely continue the suspension on wheat, rice, tur, and urad, then we will also like to review the suspension imposed on them in 2007. If situation is favourable, then we would like to re-introduce all eight suspended commodities," Khatua said.
Chopping and changing commodities being traded creates an amount of uncertainty in the market and I hope this will not happen again, he said.
"It is possible that exchanges such as Commodity and Derivatives Exchange and National Multi-Commodity Exchange that had been working on creating a farm-based portfolio will get discouraged," Khatua said. |