Commodity futures turnover dips on wheat ban

Turnover at the commodity exchanges fell in the first five months of the financial year ended March 31, 2008, as trade in agricultural goods declined after the regulator banned trading in wheat and lentils.

Commodities worth Rs 14.83 trillion ($365 billion) were traded on the 23 commodity exchanges between April 2 and August 31, compared with 15.63 trillion rupees a year earlier, the Forward Markets commission said today in a statement on its website.

The Congress party-led government in February stopped wheat futures after its communists allies blamed trading in food staples for stoking inflation. The regulator raised margins on lentils, pepper and other commodities to rein in speculation as turnover on the bourses surged 68 percent to 36 trillion rupees in the year ended March 31.

Turnover in the two weeks ended August 31 was Rs 1.58 trillion, down 3 per cent from a year earlier, the regulator said.

Multi Commodity Exchange, in which Fidelity International Ltd. owns a 9 per cent stake, traded Rs 1.17 trillion worth of commodities in the two weeks ended July 31, while its rival National Commodity & Derivatives Exchange Ltd posted a turnover of Rs 351.7 billion, the regulator said.

Goldman Sachs Group Inc owns 7 per cent of the National Commodities Exchange.

Indian exchanges are closed to overseas funds, although the South Asian country is the world's largest consumer of gold and the second-biggest producer of wheat, sugar and rice.

A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.