Commodity bourse National Commodity and Derivatives Exchange (NCDEX) will relaunch futures contracts for groundnut next week, after discontinuing the trading of the commodity in 2009.Groundnut futures contracts will restart on June 20 and the current contracts would be available for trading during July-September 2023. Moving forward, the exchange will add new contracts as per the contract launch calendar.The futures contract on the commodity exchange will be for ‘groundnut with shell’ and Bikaner would be the delivery centre, while Gonda, Gujarat would be an additional point of delivery.
According to an NCDEX circular, the transaction charges in groundnut would be Rs 3 per Rs 1 lakh of the total trade. Both the unit of trade or lot size and the delivery unit would be 5 metric tonne.
The futures trade in groundnut is likely to help oilseed farmers in hedging the risk in prices on the exchange platform, trade sources said.“It will facilitate improved price stability, enable hedging opportunities and offer a valuable tool for market participants, including farmers, processors, traders and end-users,” Sudhakar Desai, president, Indian Vegetable Oil Producers’ Association said.Groundnut is grown largely in the kharif season. Gujarat is the largest producer of groundnut in the country, followed by Rajasthan, Tamil Nadu, Andhra Pradesh, Karnataka, Madhya Pradesh, Maharashtra and West Bengal.Meanwhile, with the fall in prices of mustard seeds, which are currently ruling around Rs 4,900/quintal against the minimums support price of Rs 5,450/quintal due to bumper output, farmer producer organisations (FPO) have revived their demand for resumption of futures trade in groundnut.Current mustard mandi prices are the lowest in two years.“The ban on futures trade on mustard seed should be immediately lifted so that we can drive a better price on commodity exchanges,” Roop Singh, CEO, Uttan Mustard Producers Company, an FPO based in Bharatpur, Rajasthan, told FE.In December 2021, Sebi banned futures trade on seven agricultural commodities including non-basmati paddy, wheat, chana and mustard seeds, for one year citing rising prices.
Earlier, mustard seed and chana (gram) futures trade were suspended on October 8, 2021 and August 16, 2021. The ban on futures trade in several agricultural commodities had been further extended by a year.
The suspension of futures trade in several agricultural commodities on the commodity exchanges has no impact on the retail price volatility, according to a study conducted by academicians from top institutions including Indian Institute of Management (IIM), Udaipur.
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Stating that suspension from the futures market is often justified on the grounds of speculative activity emanating from trade in the futures market, the study titled ‘Assessing the impact of commodity derivative suspension’ stated that it has not found any role of futures market trading on price change, nor did it find any empirical evidence of impact of suspension of trade on price.