The importance of commodities futures trading is going to be enhanced manifold in the coming decades and will be of immense use to farmers, traders and processors as well, according to Ashish Argade, Manager of NCDEX.
He was speaking here on Tuesday at a stake-holders awareness seminar on commodities futures organised by The Hindu-Business Line in association with the Forward Markets Commission and NCDEX.
He said that commodities future trading would result in price discovery and facilitate hedging of risks for all those involved in the field of commodities. He said the Government had permitted futures trading in commodities from 2004 and at present five major commodities exchanges were functioning in the country.
He said there was a lot of price volatility in commodities and therefore there was an imperative need for price risk mitigation which can be achieved by futures trading through commodities exchanges.
There would be transparency in the transactions and there would not be any defaults.
He said that in future there would be integration of spot and futures markets in commodities which would be of greater use to farmers. Currently, spot markets are under the control of State governments and the futures markets in commodities are under the control of Union Government. There is a need for uniform regulations to bring about integration of spot and futures markets.
G. Chandrasekhar of Business Line explained about the mechanics of futures trading through commodities exchanges and how commodities would be the critical drivers of the Indian economy in the next 25-30 years. He also said that India was an ancient nation with young population and commodities markets also opened up a great investment opportunity for the public. However, deeper knowledge of the market and commercial intelligence would be required for investments in commodities markets. For price risk mitigation, commodities futures trading offered the best solution, he added.
Srikakulam Rice Millers Association President T. Jogarao said that the rice market should be freed from controls and it would be of use to farmers as well as rice millers. He said that it was not correct to project rice millers as exploiters, as the margins in the business were very slender.
There was an interaction session at the end of the seminar.