Centre bans futures trade in seven agri commodities including soy complex

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In a sudden move, the Securities and Exchange Board of India (SEBI) has barred exchanges from launching new futures contracts in paddy (non-basmati rice), wheat, chana, mustard seeds and its derivatives, soybean and its derivatives, crude palm oil and moong for one year.

The order that will come into immediate effect is meant to check rising prices of some of them, mainly oilseed complexes and also pulses.


The market regulator said that no new contracts will be allowed on these commodities for a period of one-year, while in respect of running contracts, no new position will be allowed to be taken and only squaring off will be allowed.

Trade sources said in case of paddy (non-basmati), wheat and moong, while there were products available,very little volumes took place on the exchanges and in case of mustard seed and chana taking fresh positions was already suspended since August.

The maximum impact of the move is expected to be on the soybean complex, where prices have been soaring much higher than the MSP since the last few months despite a bumper harvest.

The poultry industry has been demanding a curb on futures trading in soybean seed along with extension of the import deadline for soymeal as it was seed hurting their margins.

Soymeal is a key constituent of poultry feed meal and its rates are directly connected to soybean prices because seed has more than 80 per cent meal and 18 percent oil content in them.

A section of the oilseed extraction industry has also called for a curb on high soybean rates as that was hurting their crushing margins.

According to data sourced from agmarket, between October and end of November, modal soybean rates in the benchmark Indore have risen almost 76 per cent from Rs 3,500 a quintal to around Rs 6,200.

Since November-end, the rates have moved further up to around Rs 6,700 a quintal in some

The minimum support price of soybean (yellow) for 2021-22 is Rs 3,950 a quintal.

On the production front, production of soybean according to the first advance estimate of 2021-22 kharif crop crop released by the ministry of agriculture, is expected to be 12.72 million tonnes, which is marginally lower than the 12.89 million tonnes produced last year.

For chana, wheat and mustard seed, production is still to be ascertained as the 2021-22 rabi sowing is still on.

But, latest data sourced from the ministry of showed that in case of wheat, rabi crops have been sown in around 27.77 million hectares till December 17, which was just around 0.87 per cent less than last year, while chana has been sown in around 9.79 million hectares which has been 1.43 per cent more than the area covered during the same period last year.

The maximum area increase has been in the case of mustard seed, where encouraged by high prices farmers have sown mustard crop in around 8.42 million hectares till December 17, which is a whopping 24 per cent more than last year.

Trade sources said if weather remains benign in the coming weeks, India is on course to harvest a bumper 11 million tonnes of mustard in 2021-22, up from 8.5 million tonnes in 2020-21 year.

Meanwhile, on high soymeal prices, the Soybean Processors Association of India (SOPA) in a recent representation claimed that the projected demand and supply situation of soymeal is very comfortable and the fundamentals do not support any need for further imports by extending the date of shipment.

SOPA said that the rise in soybean prices is not in the hands of the processors and it is not because of anything done by the processing industry and they have already flagged the issue of hoarding and undue speculation of soybean futures.

“Farmers cannot be forced to sell soybean at MSP as desired by the poultry industry. Soybean farmers have as much right to livelihood and get remunerative prices as poultry farmers,” SOPA had said.

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First Published: Mon, December 20 2021. 11:31 IST