Mumbai: India’s commodities market regulator said there’s no proposal to halt futures trading in edible oils and potatoes, denying a newspaper report that the government may consider such a measure to cool inflation.
“I am not aware of any such plans,” the Forward Markets Commission chairman B.C. Khatua said in a telephone interview on Thursday. “We haven’t recommended any such steps,” Khatua added.
Record raw material prices have fanned inflation worldwide, prompting governments to curb exports of essential commodities.
Trading in food staples such as cooking oils, oilseeds and sugar has contributed to rising prices, according to the Left and other political parties which support Prime Minister Manmohan Singh’s Congress party-led coalition.
“The rise in prices of commodities has been universal,” Khatua said. “Why blame commodities that are traded on the exchanges.”
India’s cabinet may consider halting futures trading in some commodities, including edible oils, to curb inflation, The Times of India reported on Thursday, citing people it didn’t identify.
Singh’s party wants to cool inflation rising at the fastest pace in 13 months to bolster the coalition’s chances of retaining power in elections scheduled before May 2009. The government last year halted trading in wheat and lentils, and last month halted exports of edible oils and rice.
India relies on imports to meet half its edible oil needs. It buys palm oil from Indonesia and Malaysia, and soya bean oil from Argentina and Brazil. Edible oil imports tripled to 430,992 tonnes in February from a year earlier, according to the Solvent Extractors’ Association, a trade body.
Potatoes, soya bean oil, soya beans and mustard seeds are traded on the National Commodity and Derivatives Exchange Ltd, in which Goldman Sachs Group Inc. has a stake. Potatoes are also traded on the Multi Commodity Exchange of India Ltd, part-owned by Fidelity International Ltd and Citigroup Inc.
Mustard seed futures for April rose 3% to Rs540 per 20 kg, and soya bean oil climbed 2.7% to 559.35 per 10kg on the National Commodity Exchange. Potato futures climbed as much as 2.2% to Rs476 per 100kg on the Multi Commodity Exchange. The price has dropped 9.4% in the past six months.
Domestic traders and producing and consuming companies are the main participants in India’s commodity exchanges. Overseas funds aren’t allowed to trade in commodity futures market.