Govt to consider ban on maize futures trade

The government may consider banning futures trading in maize. Though no time-frame has been provided for such an action, maize-consuming industries, mainly the poultry and starch industries, have said that they will welcome any such move.

Last week, in a meeting with Agriculture Minister Sharad Pawar, a delegation of poultry industry led by the National Egg Co-ordination Committee (NECC) raised the issue.

Maize and soymeal are the two important feedstock for the Rs 38,000-crore poultry industry. It consumes over 65 per cent of the maize produced in the country.

Anuradha Desai, chairperson, NECC, told Business Standard, "The minister assured us that he would consider the possibility of banning forward trading in maize and soymeal. This is the first time that he was so clear and categorical on it and we are pretty optimistic regarding the ban on futures."

The development has come at a time when the maize futures are reeling under pressure over the last fortnight due to arrivals of rabi crop and the recent outbreak of bird flu in West Bengal.

In spite of a better kharif crop this season, the maize futures had spiralled up and were inching towards Rs 900 a quintal mainly on account of high exports.

According to market estimates, since November last year, the country has already exported close to 900,000 tonnes and the overall exports could reach between 1.5 million tonneses and 2 million tonnes. On the issue of checking maize exports, the minister is believed to have expressed his reservation on the matter.

Though, the maize market is passing through a bearish phase, commodity analysts maintained that the commodity has an overall bullish scenario. They did not rule out the possibility of maize prices reaching Rs 950-1,000 a quintal levels.

Banning futures would help curbing the spiralling rates, said Desai. However, commodity analysts expressed reservations that government would take any such step. Rather, they added, the government might ban futures trading of those commodities, which have high weightage in the inflation.

Meanwhile, starch manufactures have said that if government intervenes in maize, it will prove beneficial for the industry.

Amol S Sheth, president, All India Starch Manufacturers' Association, said, "Banning maize futures will put an end to the speculation in the market and prices will stabilise."

On the National Commodity and Derivatives Exchange, the near month contract of maize closed at Rs 794 a quintal against the last week's close on Thursday at Rs 780 a quintal.