Food and consumer affairs ministry to curb speculation in futures trading-Rituraj Tiwari
-The Economic Times
The food and consumer affairs ministry plans stern action to curb any speculative trading of grains in the futures market after an emergency meeting slated for later this week to review the price situation. Food and consumer affairs minister KV Thomas is taking a daily stock of prices as the country grapples with a below- normal monsoon.
"After reviewing the situation in the futures market, we will send the necessary advisory to regulator Forward Markets Commission for controlling speculation," said a ministry official.
Rising commodity prices are a big worry for the government as food inflation has remained in double digits for the past four months and fears of a drought are further stoking the prices. The ministry is most concerned over the rise in the grain and sugar prices. "We have bumper stock of wheat and surplus production of sugar. But prices are on boil. We need to curb if at all there is any speculation," the official said.
Futures trading also has the potential of becoming a political sticking point with several parties blaming speculators for the recent price rise. Recently, Mamata Banerjee-led Trinamool Congress (TMC), a key ally of the UPA government, put a spanner in the approval of the Forward Contract Regulation Act, blaming futures trading for the abnormal rise in prices. The bill has been deferred twice by the Cabinet under pressure from TMC.
Wheat prices have gone up by 20% during the month despite a record production of over 90 million tonne this year. However, on Tuesday, wheat prices fell by 0.89% to Rs 1,441 per quintal on profit booking after a strong rally.
Sugar prices have also seen an upward trend despite record production of 26 million tonne this year. The key August contract on National Commodity and Derivatives Exchange has risen 18.8% from the start of June. Soya oil prices have also gone up by 52% in anticipation of lower crop size this year.