Comm futures match BSE-NSE cash segment

In merely about two years of operation, the volume in commodity futures trading has equaled that in the cash segment of the National Stock Exchange and Bombay Stock Exchange (combined). It is expected to double its size within the next 5 years, according to an Assocham survey.

According to an Assocham analysis, trade jumped by a whopping 341 per cent to Rs 5.71 trillion in FY 2005 compared with the corresponding period last fiscal. Commodity futures market turnover rose a whopping 900 per cent in FY 2005 from FY 2003.

Releasing the analysis, Assocham President Mahendra K Sanghi said India being the leading producer of tea, coffee, foodgrains, fruits, vegetables, jute, rubber, cotton, silk, lead and zinc; the largest market player in jute, pepper, spices and oilseeds; and the largest consumer of gold, there is a huge potential ahead for the growth of the commodity futures market in the country.

With this viewpoint, large numbers of equity brokerage houses are gearing up to prepare themselves for the upcoming boom in commodity trade. "Our country has great potential for furthering the growth of the commodity futures market", said the Assocham chief.

With commodity futures volumes growing at a rapid pace, the Government is planning to spread the price discovery mechanism for all commodities across the country. A pilot project funded jointly by the Union and the state governments has been undertaken in Gujarat to evolve a working model in this regard.

In order to disseminate information about the commodity prices to the farmers and investors in the state, the project has been started in 300-400 mandis in the state. "With certain specific reforms, significant amount of development can be brought about in the trading in commodity futures which has already grown at an impressive pace in India," Sanghi said.

With trading in sweet crude oil and brent crude futures already prevalent in the country, futures trading in furnace oil will serve as a hedging mechanism for certain sectors against their fuel price risk. These sectors include power, shipping/transport, fertilizers, textiles, chemicals, iron and steel, plantation and others.

MOVING ALONG

In merely about two years of operation, the volume in commodity futures trading has equaled that in the cash segment of the National Stock Exchange and Bombay Stock Exchange (combined)

India being the leading producer of many agri commodities and the largest consumer of gold, there is a huge potential ahead for the growth of the commodity futures market in the country

With commodity futures volumes growing at a rapid pace, the Government is planning to spread the price discovery mechanism for all commodities across the country