India extends ban on futures trading in key farm commodities until January
India recently extended the halt on futures trading in key farm commodities until the end of January. This suspension was initially ordered by the Securities and Exchange Board of India (SEBI) in 2021 and was allowed to continue until December 20, 2024.
Now, SEBI has announced that the suspension will be extended until January 31, 2025. This affects trading in soybean and its derivatives, crude palm oil, wheat, paddy rice, chickpeas, green gram, and rapeseed.
The decision to extend the suspension for only one month instead of a year is seen as a positive sign. There is optimism that futures trading may be allowed to resume early next year, according to a dealer in Mumbai.
The vegetable oil industry in India has been advocating for the resumption of futures trading to help importers hedge their risks and provide growers with insights into future price movements. B V Mehta, executive director of The Solvent Extractors’ Association of India, believes that bringing back trading in soybean, rapeseed, and their derivatives could stabilize oilseed prices.
India heavily relies on imports to meet its edible oil needs, sourcing palm oil from Indonesia and Malaysia, as well as soy oil and sunflower oil from countries like Argentina, Brazil, Russia, and Ukraine.
The National Commodity and Derivatives Exchange in India, which focuses on trading in farm commodities, has been significantly impacted by the government’s decision to suspend futures trading. Multi Commodity Exchange is another platform affected by this move.
Overall, the extension of the halt on futures trading in these key farm commodities in India is aimed at curbing food inflation and ensuring stability in the agricultural sector.
