Govt bans futures trading in 7 commodities, including wheat, moong

The government has suspended futures trading in seven agricultural commodities for a year to control inflation. The Securities and Exchange Board in India (SEBI) said in a notification on Monday that trading in seven commodities including paddy (non-basmati), wheat, chana, mustard seeds and its derivatives, soya bean and its derivatives, crude palm oil and moong will remain suspended till further orders.

“No new contract shall be launched till further orders. In respect of running contracts, no new position will be allowed to be taken. Only squaring up of position will be allowed. These directions will be implemented with immediate effect. The above-mentioned directions are applicable, for a period of one year,” SEBI said in a notification.

The ban comes against the backdrop of increasing inflation. India's retail inflation in the month of November rose to 4.91 per cent, towards the upper limit of the Reserve Bank of India's (RBI) target range, due to a sharp rise in prices of fruits and vegetables, government data showed. The CPI-based inflation was at 4.48 per cent in October and 6.93 per cent in November 2020.

Annual wholesale price-based inflation also rose to 14.23 per cent in November, its highest since April 2005, against 12.54 per cent the previous month, government data showed.

The RBI expects the inflation print to be somewhat higher over the rest of the year as base effects turn adverse. The central bank stated that it expects headline inflation will peak in the fourth quarter of the current fiscal and soften thereafter.

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Also read: WPI inflation surges to 14.23% in November as crude, metal prices harden