Edible Oil Industry Urges Government To Lift Ban On Futures Trading

2024-11-26 02:10:06

(MENAFN- KNN India) New Delhi, Nov 26 (KNN) The Solvent Extractors Association of India (SEA) has called on the Indian government to lift its ban on futures trading in key agricultural commodities, including crude palm oil and soyabean, citing severe financial challenges faced by its members.

The ban, initially imposed in December 2021, has been extended multiple times, with the latest extension running through December 20, 2024.

In a letter to five key government ministers, including Home Minister Amit Shah and Finance Minister Nirmala Sitharaman, SEA argued that the suspension of futures trading has significantly hampered price risk management and market development for the edible oil industry.

"The industry was hopeful that the suspension would be lifted to enable smoother operations, but the continuation of this restriction has further weakened an essential risk mitigation tool," said SEA President Sanjeev Asthana.

The industry body emphasised that studies have shown that futures trading does not significantly contribute to inflation, a primary concern when the ban was first enforced.

In addition, SEA pointed out that current soyabean prices are trading below the government-set Minimum Support Price (MSP) of Rs 4,892 per quintal, while rapeseed prices are marginally above its MSP of Rs 5,950.

SEA particularly highlighted the need to resume futures trading for internationally traded commodities like crude palm oil and soyabean oil, arguing that the ban has left businesses exposed to heightened price volatility.

The association stressed that without the ability to hedge against price fluctuations through futures trading, businesses in the edible oil sector are at a distinct disadvantage.

The plea underscores the financial strain faced by the industry as it grapples with ongoing uncertainties in global markets. A return to futures trading, according to SEA, is seen as crucial for stabilising the sector and safeguarding against market risks.

(KNN Bureau)

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