Gujarat farmers have urged the commodity derivatives market regulator the Forward Markets Commission (FMC) to ban futures trading in castor seed due to high volatility in the past few weeks. Farmers’ representative body Bhartiya Kisan Sangh (BKS), in a letter to the FMC, said that the regulator should ban futures trading in castor seed in case excessive speculative activities are witnessed in this counter on commodity exchanges.
Average castor seed price jumped 17.83 percent in October 2014 to Rs 44,000 a tonne in Gujarat spot market, compared to Rs 37,553 a tonne in November 2013, data compiled by the Solvent Extractors’ Association showed. During the week to November 28, however, castor seed price declined 3.28 per cent to Rs 44,250 a tonne. Castor seed for delivery in April 2015 jumped 2.4 percent on Wednesday to trade at Rs 4,812 a quintal on the NCDEX. To curb excessive volatility, the FMC levied five percent additional margins on both sides (buy or long and sell or short).
Alleging FMC’s unilateral action, in terms of imposition of margins when prices move up, benefits multinational companies, BKS said, 'Let the market factors of supply - demand determine the fair prices of the castor as farmers would then be free from the clutches of the monopolistic local manufacturers'.