FMC proposes evening trading in Agri commodities
The commodity futures market regulator is considering allowing evening trading in agri commodities. At present,non-agri commodities like metals, bullion and energy products are traded in the evening session.Since prices of all these commodities are linked to global markets, which are active all the time, these are allowed in globally-linked commodities' trading in the evening session on Indian bourses.
Evening trading in globally-linked agri commodities was allowed earlier, but was discontinued six-seven years ago.This, since it served little purpose for price hedging as hedgers were hardly active and evening trading promoted dubba trading or illegal trading in northern and western parts of India.
Ramesh Abhishek, chairman of the Forward Markets Commission (FMC), said the regulator had sought views of exchanges on allowing evening trading in globally-linked agri commodities. Soya bean and oil, crude palm oil, cotton and rubber are among globally-linked agri commodities traded on Indian bourses.
FMC has asked exchanges to point out globally-linked commodities in which evening trading could be permitted. A senior exchange official said perhaps only soybean and oil would qualify because rubber was mostly traded in Japan and palm oil in Malaysia and Indonesia, which are typically morning markets from the Indian perspective.
FMC has also proposed discontinuing futures trading on Saturdays.In most exchanges, trading volumes on Saturdays are 50-70 percent of other days.Two executives on condition of anonymity said they did not support the idea of no trading in commodities futures on Saturdays
MCX steps up efforts on Agri commodities
Multi Commodity Exchange (MCX) Known for being non-agri,it gradually stepped up efforts to attract participation in agri commodities also.Though contributing insignificantly to the exchange’s overall turnover, agri commodities like mentha oil, sugar, potato and cardamom are preferred by traders on the MCX. With around 90 per cent of the market share in overall commodity futures trade, the MCX continued its leadership in almost all non-agri commodities, including base metals, precious metals and energy.
The re-launch of guar contracts, however, has also gained momentum on the MCX after the exchange intensified its efforts to attract participation in this animal feed, along with its derivative – guar gum.
While the National Commodity & Derivatives Exchange (NCDEX) attracted immense traders’ interest, MCX also gained momentum in guar segment.
“MCX has stepped up efforts on agri commodities, which resulted in participation in guar contracts,” said Naveen Mathur, associated director, Angel Broking.
On the first day of guar relaunch on May 14, MCX clocked Rs 3.58 crore turnover in guargum against Rs 28.60 crore by NCDEX. Similarly, MCX’s guar seed contracts generated a total business of Rs 20.54 crore on May 14 against Rs 53.76 crore by NCDEX.
Gradually, however, the business from the two recently launched contracts remained volatile across both exchanges. On May 27, the turnover in both guar gum and seed at MCX ended at Rs 7.82 crore and Rs 29.39 crore in comparison with Rs 23.28 crore and Rs 42.42 crore, respectively, on the NCDEX.
The Forward Markets Commission (FMC), the commodity derivatives market regulator, allowed futures trading in guar contracts after over a year following the price of seed and guar gum shooting up abnormally high in domestic markets without fundamental support .
The ministry of consumer affairs investigated into the issue over complaints by a number of traders and discovered some traders had manipulated the price to achieve quick gains. The matter is being further investigated.According to an analyst, traders are a bit cautious now.
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