Demand to start agricultural futures before the start of Kharif season

- Commodity Current : Jayavadan Gandhi

The futures and spot markets in the commodity sector are like railway tracks. Futures trading on many commodities has been discontinued over the past twenty years after concluding that futures lead to inflation. Inflation could not be controlled even after closing the pledges. Due to which some trade associations and farmers' groups have submitted to lift the ban on futures trade imposed on various agricultural commodities. Now when the income of Kharif crops is starting in the market, it has been suggested that farmers, consumers and industries will also benefit if the promises are resumed. Futures trading in every commodity be it Ryodo or Turmeric acts as a price taker to steer the market in a certain direction. In a recent presentation to the Rayda Producers Association, it has been stated that despite the ban on the futures of Rayda and other edible telebia, the prices have fluctuated several times in the last one year. Even in the oil market at the international level in the past, the futures market has not been stopped even in adverse circumstances, despite several large booms and busts in the past. While in India, the trade has been disturbed many times by imposing ban on futures and this kind of situation continues even today. Finally, the government expressed its expectation that inflation would come down after SEBI imposed a ban on futures trading in seven commodities in January. But till today the prices are increasing continuously. Even before this, many futures trading has been stopped. In the year 2007, wheat-rice futures were banned. In the year 2008, soya oil and add, rubber futures broke. Then in the year 2021, futures trading was also stopped on commodities like soybean, mug, palm oil, rayado. In short, as the belief that putting a brake on futures will lower prices has been proven wrong, trade associations have demanded a green signal to resume closed futures of all agricultural commodities from the next season.

Meanwhile, the production of Kharif crop this year 2022-23 is more likely to be slightly less than last year. According to various surveys conducted in the country, the major states of eastern India producing kharif crops, Uttar Pradesh, Bihar, West Bengal and Jharkhand, are suffering from low sowing and rainfall.

In which the average production of rice is around 100 million tons against the target of 111 million tons. Production of pulses is expected to be around 80 to 85 lakh tonnes instead of 100 lakh tonnes and cotton production is expected to be around 335 to 345 lakh bales instead of 370 lakh bales. Due to the impact of low production, the availability of the crop affects the prices and import-export, although there is a possibility of an increase in kharif production in oilseeds this year.

Prices have fallen by Rs 100 to Rs 200 per quintal last week due to the ban on rice exports and other stringent measures taken by the government.

The imposition of 20 percent export duty on non-basmati rice is expected to result in loss of 40 to 50 lakh tonnes of rice exports this year. During the year 2021-22, about 2.12 crore tonnes of rice has been exported. In the last three-four years, the export of rice has tripled. About 1.6 crore tonnes of rice is expected to be exported in the current year 2022-23 due to the export ban. The confusion of exporters is not over as foreign customers refuse to pay the 20 percent export duty suddenly imposed by the government on broken rice. Because of this, about ten lakh tons of rice goods have been stuck at various ports. The exporters said that the profit in the export of rice is low and they cannot afford to pay 20% duty. There has been a demand for concessions on rice exports which have been granted.

On the other hand, as the import of foreign goods in edible oil and pulses is increasing, prices are being affected at the local level. However, this year, instead of Myanmar, the supply of beans has increased in East African countries like Tanzania and Mozambique. Apart from this, the supply of Tuware from countries like Sudan and Kenya has been significant. At present, the markets of Karnataka and Maharashtra markets are strong as new mangoes are released. Fuel experts are expressing that pulses will continue to boom in the near future due to an average of 50 to 60 percent of the mung bean crop.