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NEW DELHI: The National Commodity Derivatives Exchange has sought capital market regulator Securities and Exchange Board of India’s approval for the relaunch of urad and tur contracts.
Tur and urad futures were delisted from futures trading in January 2007 owing to price volatility and irregularities.
With pulses selling below their minimum support price and the government holding huge stock, officials feel that getting farmers to do futures trading would help them get an indication of the prices and they can hedge their positions.
“There have been talks for the relaunch of the urad and tur contracts.
We look forward to the launch of the contracts to extend national price discovery and risk management for all the key pulses and to encourage participation of farmer producer organisations for improving farmer income,” said a spokesperson from Ncdex.
Sebi is fully empowered to determine the timing of launch and relaunch of all commodities notified under the Securities Contracts (Regulation) Act, said the spokesperson.
“Recent price fall below the minimum support price in all major pulses as a result of record production and supply glut has necessitated the need of a marketbased instrument which can provide a platform to the farmers to hedge their price risk,” said the official who added that while there is significant increase in MSP, procurement is not 100per cent of the production.
Having a commodity on futures platform will enable farmers in taking an informed decision about the likely price scenario during harvesting period, said the spokesperson.
“Farmers can also regularly monitor the futures prices and use them as reference for selling in the physical market,” he said.
In the last five years, a significant rise in production was seen in urad and tur leading to the fall in prices, said Sunil Baldeva of BJSN Agro Implex, a pulses trading company from Delhi’s Naya Bazaar market.
Currently, in the Delhi market, tur is being traded at Rupee3,800 a quintal and urad at Rupee3,700 — 34per cent less than the MSP for 2018-19, he said.
Urad and tur contribute around 13per cent and 17per cent, respectively, of the total production of pulses in India while chana contributes around 46per cent, according to Ncdex.
“The government through PSUs should participate in the futures trading to keep market prices stable,” said Baldeva.
India’s agriculture production is largely dependent upon monsoons, thus production can deviate significantly from year to year resulting in high price volatility, said the Ncdex spokesperson.
“This situation poses a major challenge to value chain participants, including farmers, to manage their business risk.
International market sentiments also impact Indian price scenario,” he added.
