Govt bans futures trading in 7 commodities to curb inflation

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New Delhi: The Ministry of Finance has suspended the trading in Futures and Options (F&O) contracts of as many as seven agricultural commodities for one year to combat the rising inflation.

The commodities put under the ban list include wheat, paddy (non-basmati), chana, mustard seeds and their derivatives, soya bean, crude palm oil and moong.

No fresh positions (including intra-day) will be allowed in F&O contracts of commodities listed. No new F&O contracts will be launched till further notice, it added.

The suspension comes into effect from December 20, 2021, and will be applicable for a period of a year, the Sebi said in a notification. However, traders can only square off of existing positions.

The government is eyeing to control the rising inflation. These seven agri commodities command a greater usage in households, thus, are highly traded, said Kshitij Purohit, Lead Commodity & Currency at CapitalVia Global Research.

Consumer price inflation for November increased to a three-month high of 4.91 per cent and food prices rose. This was despite cuts in excise duty by the government and states, which did not provide much relief in tempering inflation.

Wholesale inflation for November accelerated 14.23 per cent from 12.54 per cent in the month of October. This was the eighth consecutive month in which it stayed at a double-digit level.

“Inflation has increased 14.5 per cent in these commodities, which is likely to affect the overall inflation,” Purohit added. “If the prices do not cool off, more commodities are likely to be added to the list.”