Ban on grain future trading hits comexes

Major commodity exchanges have suffered a setback due to ban in the future trading of essential foodgrain by the government, said P H Ravikumar, managing director and CEO, NCDEX.

According to government reports, compared to the same period last year,the overall trade volume in the exchanges have declined by 12 per cent in all the three exchanges, he said.

With urad, tur, rice and wheat being de-listed from the exchange, in NCDEX alone the average volume of trade has come down by over 50 per cent compared with the last year, said Ravikumar.

In the first quarter of the last year, the volume of trade per day, per side in the exchange was Rs 5,500 crore, which has come down to around Rs 3,000 crore in the present quarter. Simultaneously, the number of traders using the exchange per day has also come down from an average of around 7,000 to about 5,000.

"Wrong policy statements by government along with de-listing urad, tur, wheat and rice resulted in the decline," said Ravikumar.

He claimed that inflation due to commodities traded in exchanges was 0.3 per cent, against 0.8 per cent in commodities not traded in the exchange. "Demand and supply mismatch and not future trading is the cause of wheat shortage in the country,"he said, adding, "for the last four years no new variety of wheat has been found, leading to the present shortage," he said. National Commodity and Derivatives Exchange, Multi Commodity Exchange and National Multi Commodity Exchange are the three major commodity exchanges in the country. However, in spite of the ban, MCX, which has has a market share of 70 per cent in commodity exchange market, per day double side volume of trade increased from Rs 16,000 crore to Rs 20,000 crore over the last year, claimed Arindam Saha, assistant vice-president, MCX.