Mumbai: India, the world’s second largest grower of rice and wheat, may next month lift a two-year ban on futures trading in the cereals as record harvests cool domestic food prices.
The Forward Markets Commission (FMC), the market regulator, will write to the Union government seeking an end to the curbs, chairman B.C. Khatua said on Monday.
Resuming trading may help National Commodity and Derivatives Exchange Ltd, partly owned by Goldman Sachs Group Inc., to stem a decline in the turnover of agricultural goods.
Good harvest: Wheat output may exceed last year’s 78.4mt. Ramesh Pathania/Mint
Prime Minister Manmohan Singh’s government in December lifted a seven-month ban on trading rubber, soya bean oil, potatoes and chickpeas after inflation halved from a 16-year high in August.
“The prospects for the winter crop are very good and the resumption in trading will not go against the producers or the consumers,” Khatua said.
Wheat output may exceed last year’s 78.4 million tonnes (mt) and production of monsoon-sown rice may reach 83.3mt, both records, according to the agriculture ministry. The winter-sown rice harvest may rise 3% to 14mt, it said.
Monsoon-sown rice contributes nearly 85% of the country’s production of the cereal. The winter crop, planted in October, makes up the remainder.
“Ideally, we would like to resume trading before the winter crop arrives in the market, toward the end of February,” Khatua said. “The market doesn’t trade any major cereals at the moment and wheat and rice would be good additions.”
Turnover in farm commodity futures dropped by one-third to Rs4.4 trillion in the nine months ended December because of the ban.
India’s inflation rate has slowed to an 11-month low, helped by the slump in prices of crude oil and other commodities.