Futures ban on four commodities extended until November 30

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New Delhi, Sep 5: The government on Friday extended the suspension of futures trading on four key commodities in the exchanges till November 30. The suspension on potato, refined soyaoil, chana (chikpea) and rubber was first imposed on May 6 for four months that expired on Friday.

“The suspension on futures trading has been extended till November 30”, Forward Markets Commission director, Anupam Mishra told FE. Earlier in the day, agriculture minister Sharad Pawar told reporters, “We have authorised the FMC to take a final decision on the suspension as the regulator is an independent authority”. Rubber accounted for 28% of the traded volumes at NMCE before the ban, while chana accounted for 15% of the volume at NCDEX. FE was the first to report, on August 29, that the government will continue with the suspension.

The extension comes despite FMC chairman BC Khatua writing to the agriculture ministry, seeking a revocation of the suspension.

The regulator had said the suspension has not helped in cooling prices.

With international crude and commodity prices dropping, pressure has been building on the government to revoke the suspension, more so because prices of the four suspended commodities didn’t show a significant fall. Inflation for the week ended Aug. 23 is at 12.34% up, from 9% in May.

In 2007, the government had banned futures in wheat and rice also to tame inflation. With the left parties off its back, commodity traders expected the suspension would be revoked.

Data compiled from various traders and commodity exchanges show that barring the prices of potato, prices of the three suspended commodities have increased in the last four months. Potato prices dropped because of bumper production.

In the local markets, refined soy oil prices have moved up by around 4% since trading in their futures were suspended. They were up by almost 22% at one time, before ebbing international prices pulled them back.

While, natural rubber prices has moved up by almost 17% since the suspension of futures in May, and at one time it was up by almost 20% because of a surge in crude oil prices.

Chana (chickpea) prices are also up by more than 4%, and at one time were higher by more than 6%. Potato prices have dropped by almost 18% since futures were suspended in May.