The government is examining demand by domestic poultry farmers to ban futures trading in corn amid a surge in local prices, minister for agriculture Minister Sharad Pawar said.
“We’ve received a request from the poultry industry this week that the futures be banned. We’re studying the request,” Pawar said in the Lok Sabha on Monday. “We will apply our mind take a proper decision.”
India’s government has permitted duty-free imports of corn and banned exports by non-state-run trading companies to fill a production gap that caused local prices to jump 30% last year. Output may fall 15% this year to 12.8 million tonnes, according to the All India Starch Association.
“A ban or some kind of restriction on futures trading will drive out speculators,” said Amol Sheth, president of All India Starch Association. “This will help bring down prices at a time when there’s a shortage.”
Corn prices for March delivery fell as much as Rs17.50 per 100kg or 2.3%, to Rs739 on the Mumbai-based National & Derivatives Exchange. They traded at Rs744 at 3:14 p.m. Prices rose to a record Rs853.50 in November.
Corn reached a decade-high of $4.5025 ( ??? ) a bushel on Feb. 26 in Chicago as dry weather cut U.S. output and demand for the grain to make ethanol surged. It has since fallen 7.5 percent.
India, the world’s second largest producer of wheat and rice, banned futures trading in the two commodities last month to curb the fastest inflation in two years. The government has in the past two months reduced import duties on cooking oils, steel, aluminum, copper, cement and chemicals such as sulphur, and cut prices of auto-fuels.
“It is a foregone conclusion that the government’s axe will fall on commodities that are part of the price index and facing supply constraints,” said Unupom Kausik, head of research at Anagram Commodity Ltd at Ahmedabad.
India’s key wholesale price inflation rate quickened to a near two-year high of 6.1% in the week ended 24 February from 6.05% in the previous week. Inflation has stayed above the central bank’s tolerance level of 5% since September.