0

0

0

0

0

0

0

0

0

market | IST

Sebi bars NCDEX from launching new mustard seed contracts; FAO food prices up 32.8% in Sept

Mini

The notification that came in from the exchanges and the regulator as well today banning yet again commodity in the agriculture space and this time around is the rape mustard seed. The Sebi notification says that new no new contracts will be launched in futures or the option space. Also no new positions can be taken.

Markets watchdog Sebi on Friday barred commodity exchange NCDEX from launching new mustard seed contracts till further orders amid efforts to curb rising prices of mustard oil. The latest direction for the National Commodity & Derivatives Exchange Ltd (NCDEX) will come into immediate effect.
The Sebi notification says that no new contracts should be launched in futures or the option space. The order also said that no new positions will be allowed and market participants can only square off their existing positions.
Earlier in August, too, SEBI had banned Chana futures the same way with an immediate effect. The regulator in both instances has not cited reasons about why they are doing that.
Edible oil industry body Solvent Extractors Association's (SEA) executive director B V Mehta said Sebi has taken this decision to check further rise in prices of mustard oils. Much of the mustard seed stock has been crushed and as a result, there is pressure on prices, he added.
A tight supply of mustard seeds has put pressure on wholesale and retail prices of mustard oil. According to the government data, the average retail price of mustard oil (packaged) increased to Rs 183.50 per kg on October 7 this year from Rs 128.50 per kg on October 8, 2020.
Meanwhile, markets are clearly uneasy because of the increase in prices of mustard oil. India depends on imports for 70 percent of its edible oil requirements.
Edible oil prices in the international markets are also at all-time highs. Prices in the Indian markets have seen 60 to 120 percent gains in the past one year.
It actually drains liquidity and the markets suddenly start squaring off positions in other agricultural commodities as well.
Markets feel that because there is lower availability and the mustard seed is a rabi crop so the new crop will come only in February or March. so there will be four or five months of wait for the new crop arrival.
Food and Agriculture Organization (FAO) food price index, a measure of the monthly change in global prices of a basket of food commodities, gained by nearly 32 percent in September as compared to the previous year.
World vegetable oil prices were up 1.7 percent in the month and showing a year-on-year rise of nearly 60 percent, as palm oil prices climbed on robust import demand and concerns over labour shortages in Malaysia, FAO said.
Palm oil futures have rallied further in early October to hit record highs as a surge in crude oil markets has lent further support to vegetable oils used in biodiesel.
-With PTI inputs