October 16, 2009

India wheat futures volume likely remain low on uncertain policy


India's wheat futures volumes are likely to remain subdued as traders are wary about uncertain government policies on futures trade, a senior exchange official said Thursday (October 15).


Daily trading volumes in wheat on the exchange are less than half compared with 2007, when a ban on futures trading of the grain was imposed after some lawmakers said speculation in wheat futures was causing even spot prices to rise.


"The hedgers and traders are not entering the market in a big way due to lack of a proper policy regarding agriculture futures trade," said R. Ramaseshan, managing director of NCDEX.


India had lifted a two-year ban on wheat futures in May on the back of two successive bumper harvests. The trading bans continue in rice and some pulses since 2007.


On Jan. 8, 2007, volumes had touched a record 78,000 tonnes.


Currently, average daily trading volumes are below 10,000 tonnes on most days, according to the data from National Commodity & Derivatives Exchange, the country's top futures exchange for farm commodities.


Ramaseshan said the wheat futures volumes may increase once the market gets a clear direction on new crop. The sowing of wheat will start later this month.


The Indian federal government's wheat stocks of around 32.6 million tonnes were so large that it could dictate the pricing of the grain in local markets, Ramaseshan said.  

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