May 8 (Bloomberg) -- India, the world's second-largest importer of vegetable oils, has expanded bans on trading of food futures as the government intensified efforts to cool inflation that's at the highest in more than three years. Trading in soybean oil, potatoes and chick peas will be suspended on exchanges including the Multi Commodity Exchange of India Ltd. today, said Anupam Mishra, a director at the Forward Markets Commission, an industry regulator. Trading in rubber futures also will be suspended. ------------------------------------------ We would never do that, now would we.
In the good old USA it has been illegal to trade futures on one particular commodity for the last 50 years.
the Indian government is trying to please two different constituencies that have differing goals - farmers want a high price for their crop, while consumers want a low price. Given the heavy debt burdens that many Indian farmers carry, to deny them a chance to sell their crops at higher price so they can pay off their debts quickly is a bad idea. Secondly, the "cheap" or subsidized rice is often of poor quality - why should a farmer make sure that rice that will be sold at a fixed price be as good as rice that is sold at a market price? Agriculture employs nearly 2/3 of India's labor force, while producing only one-quarter of GDP. It is extremely inefficient. It would be better to take those farmhands and put their labor to better uses.
good thing India controls all the other similar commodities in the world...NOT You cannot control or shut off the spigot if you are a minor player..
They are not even trying to impose price controls. Just banning futures. Which trade off the spot price... The funniest thing is that it's a Harvard-educated minister who is responsible. Always thought MIT and Yale were better, myself.
There is one commodity so instrumental to the general economic welfare of the United States that futures trading has been banned for 50 years. In 1958 Congress passed public law 85-839 that banned futures trading in onions. Yes, indeed you can legally trade futures on any commodity you want to, except for the potentially economically deadly onion.