Govt bans futures trade in tur, urad

In a move to check inflation, the government today banned futures trading in tur and urad pulses with immediate effect.

Forward Markets Commission (FMC) Chairman S Sundareshan said all open positions in these commodities would be squared off at today's closing price and exchanges could not start a new contract in both pulses without FMC's permission.

Traders, however, termed this a knee-jerk reaction and said it would trigger heavy selling in the spot market tomorrow, leading to a sharp price fall.

The total open interest position for tur desi contracts till June was 61,860 tonnes on the National Commodity and Derivatives Exchange (Ncdex). The position for urad desi was 32,860 tonnes at Tuesday's closing.

February tur futures closed on a weaker note at Rs 2,281 a quintal, against the previous close of Rs 2,322 a quintal. Both commodities have a 7-8 per cent share in NCDEX's turnover.

Open positions will be settled on a cash basis but those that have taken positions in futures with stocks in hand will sell these stocks in the open market.

Traders or hedgers with short positions at lower prices would be the big losers, said an analyst.

Traders in spot markets are happy as they have always believed that futures were fuelling the price rise, a view shared by the parliamentary standing committee on food.