Chairman of the Indian "Forwards Markets Commission" Says Commodity Trading Suspension Should End

According to Chairman of the Forwards Markets Commission (FMC) in India, B.C. Khatua, he expects the current suspension of trading of commodity futures on potatoes, rubber, chana and soyoil to end on November 30.

“We will be making a submission of our analysis on the suspension to the government in the coming weeks. Our preliminary study indicates that easing inflation especially in food commodities makes the situation favourable to restart futures in these commodities,” said Khatua.

The reason behind the suspension was the misguided idea that futures markets were being manipulated by traders, even though there isn't a shred of evidence it's true.

If India wants to emerge as a predictable, reliable commodities market, they can't suspend trading on existing commodities just because the price of food increases.

In a number of cases traders have been fined because of gains they made in their trading on Indian commodity exchanges.

India may Expand Ban on an Increasing Number of Futures Items

With commodities attracting more speculators across the world, some countries, like India, are making some changes in order to combat rising prices not connected to normal market forces.

Some of the specific futures trading items they are considering banning are potatoes and edible oil, which has risen in price considerably because of futures speculators. Inflation in India is at a 13-month high.

Last year the Indian government added rice and wheat to the futures that can't be traded.

Those involved with commodity exchanges and traders feel this isn't a good idea, because it probably won't have much impact on food prices.

“The futures trading ban may not have any impact on edible oil prices, as international prices and imports duties determine the prices,” a trader said.

Along with foods delisted in futures trading, things like coal, steel, iron, jute drugs, petroleum products and auto-related accessories are not included in futures trading in India at this time.