India extends halt on futures trading in key farm commodities until January

The suspension was first extended until December 20, 2023, and later to December 20, 2024

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A woman harvests rice in a paddy field on the outskirts of Panipat on November 26, 2024. AFP File

By Reuters

Published: Thu 19 Dec 2024, 8:34 AM

India extended the suspension of trading in derivative contracts for key farm commodities until January, as the world's largest importer of vegetable oils and a major producer of wheat and rice seeks to curb food inflation.

The Securities and Exchange Board of India (SEBI) initially ordered a year-long suspension of futures trading in key farm commodities in 2021 — a significant move since futures trading was allowed in 2003.

The suspension was first extended until December 20, 2023, and later to December 20, 2024.

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In a notification issued late on Wednesday, SEBI said the suspension of trading in futures contracts would now continue until January 31, 2025, on soybean and its derivatives, crude palm oil, wheat, paddy rice, chickpeas, green gram and rapeseed.

"Instead of extending the ban for a year as it did in the past two instances, it has extended it for only one month. This is a good sign. Perhaps futures trading will be allowed early next year," said a Mumbai-based dealer with a global trade house.

The Indian vegetable oil industry has been seeking the resumption of futures trading to help importers hedge their risks and provide oilseed growers with an indication of future price movements.

The resumption of futures trading in soybean, rapeseed, and their derivatives would help bring stability to oilseed prices, said B V Mehta, executive director of The Solvent Extractors' Association of India.

India meets nearly two-thirds of its edible oil requirements through imports, primarily of palm oil from Indonesia and Malaysia, as well as soyoil and sunflower oil from Argentina, Brazil, Russia, and Ukraine.

India's National Commodity and Derivatives Exchange (NCDEX), which derives most of its volume from trading in farm commodities, was the most affected by the government's decision, followed by the Multi Commodity Exchange.

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Reuters

Published: Thu 19 Dec 2024, 8:34 AM

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