The affected commodities are paddy (non-basmati), wheat, chana, mustard seeds & its derivatives, soya bean & its derivatives, crude palm oil and moong, a Sebi circular said. Of these seven, derivatives contracts on chana and mustard seeds are already under suspension for trading. The new circular extends the period of suspension till December 19, 2022.
Market players said that the government move is most likely aimed at reining in inflation in food prices with some of them also viewing it as a “knee-jerk reaction”. They also pointed out that in at least four of these seven commodities, trading volumes on the commexes are nearly zero and hence there may not be any impact on the prices of these items in the domestic market. Additionally, about 70% of the edible oils consumed in India is imported, so this government order may have a minuscule to no impact on the prices of these commodities.
In the past too, the government has resorted to bans, including export of food products, describing them as essential to tame prices. Earlier this month, the government said that wholesale price inflation (WPI) for November was at 14.23%. This was the highest WPI level in 12 years, official data showed. The rise was because of a sharp increase in the prices of several items, including food products. Market players said the government is trying to rein in inflation since at least five states are going to polls in early 2022.
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