Future prices of agriculture commodities tumble on rumours of trade ban

MUMBAI: Futures prices of agriculture commodities, including chana, soyabean, soyaoil and wheat, tumbled as much as 3% on Monday on rumours of a possible ban by the Narendra Modi government on farm products trading from the decadeold commodity futures market.

Officials from two commodity exchanges said on condition of anonymity that rumours doing the rounds of the markets over the past few days may have pulled down prices, which are already on a downtrend, on Monday, but added that they had no idea of the veracity of the market grapevine. However, a source told ET that there were no indications until Monday of any "interference" in the commodity futures market.

Regulator Forward Markets Commission (FMC) has asked NCDEX to examine trade patterns and report to it on Tuesday about the price collapse on agri counters. Soyabean futures fell 3.4% to Rs 4,311 a quintal (100 kilograms) while chana dropped 3.2% to Rs 2,276 a quintal and wheat and soyaoil by over 1% each to Rs 1,518 a quintal and Rs 650 per 10 kilogram, respectively.

Apart from these commodities, the unit prices of castorseed, guarseed, mustardseed, jeera, cottonseed oilcake and crude palm oil fell between 1% and 3.7% on NCDEX. NCDEX's turnover at 5pm fell 18% from Friday's level to Rs 3,683 crore. The fall of over 3% in chana and soyabean and more than 1% in wheat and soyaoil over a single trading session was described as "large" by an analyst from Admisi Commodities.

The rumours have gained currency after the Modi-led NDA government was installed last month in New Delhi. "Rumours of a ban by the new government may have driven down prices, but there’s no telling whether these talks are true or not," said Harish Galipelli, head of research at South India-based brokerage JRG Wealth Management.

A futures contract facilitates the purchase or sale of a commodity at a predetermined price on a future date.