| Date: |
10-10-2015 |
| Subject: |
After onions and pulses, soyabean prices to be high soon |
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PUNE: It seems that speculators are ruling the roost in the second year of Modi government. After onions and pulses, speculation has now hit soyabean. The soyabean processing industry has written to UK Sinha, chairman, Securities and Exchange Board of India (SEBI) alleging that the speculative activity in soyabean futures market is keeping soyabean prices artificially high. However, the National Commodities and Derivatives Exchange Ltd (NCDEX) has refuted allegations of speculation.
The Soyabean Processors Association (SOPA) in a letter addressed to the SEBI chairman has said that the main reason for unusually high price of soybean is unhealthy speculation in soyabean futures at the commodity exchanges. "The futures market, which was supposed to act as tool for price discovery is now being used by speculators for moving the prices up and down without any link to the physical market and without any logic," said Davish Jain, chairman, SOPA in a release.
The Solvent Extractors Association (SEA) of India has also raised the issue of speculation in a letter written to SEBI, which recently took the Forward Markets Commission (FMC) under its fold. "The artificial activity going on in the soyabean futures market and not behaving in line with the fundamentals of the commodity or the natural demand and supply balance.... there has been continuous attempt by speculators to keep the prices artificially high." SEA has urged SEBI to take impose appropriate margins and take measures needed to cool down the market," stated the SEA letter.
However, NCDEX has released a statement refuting allegations of speculation made by the soyabean industry. The NCDEX release stated: "The allegations being made are presumptive and misconstrued. The contract is well regulated and has wide participation of varied value chain participants. The regulatory framework of the exchange along with stringent trade limits and margins ensures transparent and fair price discovery."
The soyabean processors have claimed that the main reason for fall in India's soya meal exports is that the country is completely out-priced by competitors like Brazil, Argentina and USA, who offer meal at a price which is lower by 20% to 30% than India. The main reason for India's un-competitiveness, according the the industry, is the high raw material price.
SOPA has said that the upward price movement between September 1 ( Rs 3230/quintal) and October 5 ( Rs 3681/quintal) was 14%, which has no justification because the new crop has just started arriving and this is the peak season for soyabean harvest. "Prices during October and December are always subdued. The current rally is driven by speculators and it has become the nature of the market that now physical market is following the futures rather than the other way round," stated the SOPA letter.
However, NCDEX has refuted this allegation of SOPA too. "The futures prices on the exchange platform are a reflection of the underlying physical market demand supply fundamentals. In the case of soybean, the near month futures prices are in fact quoting lower than the spot prices. The Open interest on the platform is approximately 2 lakh MT which is barely 2% of the estimated crop size which further refutes the argument of futures trade leading spot prices," stated NCDEX release.
Source : economictimes.indiatimes.com
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