The commodity futures exchanges witnessed a 22.91 per cent rise in turnover during October this year despite a dramatic fall in prices due to the global economic slowdown.
The three national commodities exchanges including the Multi Commodity Exchange (MCX), the National Commodity & Derivatives Exchange (NCDEX) and the National Multi Commodity Exchange (NMCE), that represent over 95 per cent of the country’s commodity futures space, recorded a total turnover of Rs 397,236.72 crore in October this year as compared to Rs 323,182.44 crore last year.
While MCX and NMCE witnessed an increase of 32.78 per cent and 62.43 per cent in their turnover respectively, NCDEX showed a 31.47 per cent decline.
Experts attribute the slump in NCDEX’s turnover to the exchange’s agricultural focus which has been on government’s as well as the regulator’s radar because of rising inflation. Importantly, lack of global referenceable benchmark price in agri commodities has shaken traders’ confidence.
Additionally, the commodity market regulator, Forward Market Commission (FMC) suspended eight excessive liquid agriculture commodities which were abundantly traded on NCDEX, the exchange known largely for offering trade in agri commodities. The government’s harsh action had a direct bearing on the exchange turnover, an analyst said.
Hence, there is a limited chance for these commodities to add to India’s inflation separately. If the government takes any action because of their high weightage in the wholesale price index (WPI), that measures inflation, then a holistic view is taken with regards to cool prices. The government action has nothing to do with the trade at futures platform.
Apparently, NMCE in association with Reliance Money, has taken several initiatives including launches of new contracts in base and precious metals. This resulted to a staggering rise in precious metals turnover on the Ahmedabad-based exchange which was earlier known for plantation contracts.
Since, rubber futures were suspended, the exchange diverted towards precious metals and recorded total turnover of Rs 202.02 crore in October 2008 as compared to “nil” in the same month last year.
| Turnover in Rs crore | ||||||
| Sector | MCX | NCDEX |
NMCE | |||
| 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | |
| Agri commodity | 5,911.84 | 1,390.57 | 43,458.47 | 29,342.48 | 3,092.81 | 3,728.14 |
| Precious metals | 134,121.99 | 235,263.53 | 6,089.40 | 3,750.47 | 0 | 202.03 |
| Total | 269,000.70 | 357,182.66 | 51,066.88 | 34,994.46 | 3,114.86 | 5,059.60 |
| Source: BS Research | ||||||
Total turnover of precious metals jumped sharply by 70.61 per cent to Rs 239216.03 crore during October this year in comparison with Rs 140211.40 crore in October 2007.
Agriculture commodities turnover, in contrast, nosedived 34.31 per cent to Rs 34461.19 crore during the month under consideration as compared from Rs 52463.12 crore.
