Commodity bourse the National Commodity and Derivatives Exchange (NCDEX) will be relaunching futures contracts of groundnut in the next couple of weeks, trade sources said. NCDEX had discontinued trading in groundnut futures around 2010.
They said that groundnut prices witness volatility and global participation and interest in the commodity segments has increased in the last two years.
The futures trade in groundnut is likely to help farmers in hedging the risk in prices on the exchange platform, sources said.
The futures contract on the commodity exchange will be for ‘groundnut with shell’ and Rajasthan and Gujarat are likely to be the delivery points for trade.
Groundnut is grown largely in kharif season. Gujarat is the largest producer of groundnut in the country, followed by Rajasthan, Tamil Nadu, Andhra Pradesh, Karnataka, Madhya Pradesh, Maharashtra and West Bengal.
Meanwhile, with fall in prices of mustard seeds due to bumper output, farmer producer organisations (FPO) have revived their demand for resumption of futures trade in groundnut.
In December 2021, SEBI banned futures trade on seven agricultural commodities including non-basmati paddy, wheat, chana and mustard seeds for one year citing rising prices.
Earlier, mustard seed and chana (gram) futures trade were suspended on October 8, 2021 and August 16, 2021.
The ban on futures trade in several agricultural commodities had been further extended by a year.
The suspension of futures trade in several agricultural commodities on the commodity exchanges has no impact on the retail price volatility, according to a study conducted by academicians from top institutions including Indian Institute of Management (IIM), Udaipur.
Stating that suspension from futures market is often justified on the grounds of speculative activity emanating from trade in the futures market, the study titled ‘Assessing the impact of commodity derivative suspension’ stated that it has not found any role of futures market trading on price change, nor did it find any empirical evidence of impact of suspension of trade on price behaviour.