Farmers hit due to ban on futures in 4 commodities

Written by Commodities Bureau | Bangalore, Aug 27 | Updated: Aug 28 2008, 05:52am hrs
The ban on futures trading in four commodities has affected the farmers in discovering price for their products, said BC Khatua, chairman of Forward Markets Commission.

Khatua said, There is no evidence that the futures trading has escalated prices of commodities. He said that the FMC has commissioned a study through the Indian Institute of Management (IIM) professionals on futures trading in commodities.

The study revealed that the futures trading is no way connected to price escalation.

FMC is in favour of lifting ban on four commodities - chana, rubber, potato and soya oil, which were suspended from futures trading from May.

The ban period will end on September 6, 2008. He indicated that exchanges will require some time to re-launch the contract of these four commodities even if the ban was lifted after the scheduled time.

He said, Even if the suspension is not extended, I dont foresee the contracts starting before the end of September. Proposal has to come from exchanges. We have to examine and allow them to re-launch. So that process itself will take sometime.

He also said that the FMC will come out with certain rules on compulsory delivery contract. Defaults in compulsory delivery contract have been affecting the buyers.

Khatua was in Bangalore to attend a FMC meeting, in which representatives of commodity exchanges like MCX, NCDEX and NMCE and Trade and Manufacturers Associations, Chambers of Commerce and Industry, Marketing Federations and Cooperatives participated.

The meeting discussed various issues related to futures market, Khatua said. Some of the major issues raised by the participants included the effect of futures market on the physical market, the correlation between volatility of prices in spot and futures market and need for decontrol of sugar.