Mumbai: Sebi Market Regulator, acting on government direction, was suspended earlier on Monday the introduction of a new futures contract in seven agro commodities for one year, immediately effective.
Sebi also requested commodity exchange (commexes) that allowed trade in commodity derivatives not to let its members take new positions in this commodity.
The affected commodities are rice (non-basmati), wheat, chana, mustard seeds & derivatives, soybean nuts & derivatives, crude palm oil and moong, coiling peers.
Of these seven, derivative contracts in Chana and mustard seeds have been under suspension to trade.
The new circulation expanded the suspension period until December 19, 2022.
Market participants said that the government’s movement was most likely aimed at reining in inflation with food prices with some of them also saw it as a “knee-jerk reaction”.
They also show that in at least four of these seven commodities, the trading volume on Commex is almost zero and therefore may have no impact on the prices of these items in the domestic market.
In addition, about 70% of edible oil consumed in India are imported, so this government’s order may have a minuscule not to have an impact on this commodity price.
In the past too, the government has used a ban, including exports of food products, describing it as an important price to tame.
Earlier this month, the government said that the inflation of wholesale prices (WPI) for November was at 14.23%.
This is the highest WPI level in 12 years, official data shows.
The increase was due to a sharp increase in the price of several items, including food products.
Market participants said the government tried to control inflation because at least five countries would conduct a poll in early 2022.