Futures Trading of Principal Cereal Crops at The Major Commodity Exchanges of India

The present study studies the futures trading of major cereal crops of India. The maximum share of total traded value was of MCX amounting to 88.02 per cent while as that of NCDEX in the trading was 9.16 per cent, ICE was 1.29 per cent, NMCE and ACE was 0.66 per cent each and all other commodity exchanges was only 0.21 per cent. Wheat and rice were banned from futures trading in February 2007 and the ban in case of wheat was lifted in May, 2009 while that of rice is still imposed. It was observed that the claims that futures trading drives up prices and thus inflation is also shooting up to all time high cannot be justified, since the ban on the futures trading was unsuccessful in checking the increasing price of various agricultural commodities. It was observed that futures market encourages competition by attracting traders who hedge their bets and minimize risks on the basis of their own market information and price judgment.