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Mumbai: India has suspended futures trading in four commodities with immediate effect in its latest move to rein in soaring inflation, sending prices of other commodities higher on Thursday as traders switched contracts.
India has taken a series of fiscal measures to bring down prices, and the commodities market regulator said trading in futures contracts in soyoil, potato, chana or chick pea, and rubber had been suspended for four months.
"This is effective from Thursday... we have informed the exchanges in this regard," said Anupam Mishra, a director with the market regulator, the Forward Markets Commission.
"There will be no trading from today in these commodities... All settlements will be based on yesterday's [Wednesday] closing price."
Soyoil and chana were among the most traded commodities on the Indian exchanges.
Pepper, chilli and jeera contracts fell in early trade but volume and prices in commodities such as soybean, rapeseed or mustard seed, guar seed and turmeric picked up as investors switched out of the suspended contracts.
The September soybean contract was up 2.53 per cent at Rs2,152 per 100kg at 0724 GMT and the July rape seed contract was up 2.43 per cent at Rs581.50 per 20kg.
"There appears to be some repositioning from soyoil to oilseeds," said Rajini Panicker, head of research at MF Global Commodities India Ltd.
The futures market had been expecting a ban on some food futures trading for several weeks as communist parties, which lend support to the ruling coalition, have demanded action, saying futures trading has stoked rising food prices.
"It won't help in pulling down [spot] prices," said Mumbai-based KC Bhartiya, president of the Pulses Importers' Association of India. "In the long run it will adversely affect farmers and importers who were hedging their risk on the exchange platform."
Forecast: Inflation to slow
India's inflation is expected to slow by one percentage point in six to eight weeks on record harvests, a normal monsoon and measures to rein in prices by the government, the central bank and companies.
The government will also take further measures to fight inflation, Junior Industry Minister Ashwani Kumar said.
Wholesale prices rose 7.57 percent in the week ended April 19 from a year earlier, the government said on May 2. Inflation accelerated to a median 7.66 percent the following week.
- Bloomberg
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