The Solvent Extractors’ Association of India (SEA) has called on the Indian government to lift the ongoing ban on futures trading in edible oils, emphasizing that such a move would support farmers and aid market stability. The ban, initially imposed in December 2021, covers seven agricultural commodities including wheat, paddy (non-basmati), chana, mustard seeds, soyabean, crude palm oil, and moong. Despite being extended multiple times, the current restriction is set to last until December 20, 2024.
In a letter addressed to five ministers, including Home Minister Amit Shah and Finance Minister Nirmala Sitharaman, the SEA expressed concerns that the suspension of futures trading had severely impacted price risk management and hindered market development. “The industry was hopeful that the suspension would be lifted to enable smoother operations, but the continuation of this restriction has further weakened an essential risk mitigation tool,” said SEA President Sanjeev Asthana.
The SEA also noted that studies had demonstrated futures trading does not significantly contribute to inflation, which had been a primary concern when the ban was first introduced. As of the latest data, soyabean prices were trading below the government-set minimum support price (MSP) of INR 4,892 (US$57.83) per quintal, while rapeseed prices were slightly above the MSP of INR 5,950 (US$70.34).
The association stressed that the resumption of futures trading in internationally traded commodities, such as crude palm oil and crude soybean oil, is crucial. Without this, businesses are left vulnerable to greater price volatility, further complicating the economic landscape for India’s edible oil industry.
Related topic:
