India agri-commodity futures volume seen rebounding

By Rajendra Jadhav & Sourav Mishra

MUMBAI, April 30 (Reuters) - Volumes in Indian agri-commodity futures, which saw thin trade in March and April, are likely to rebound after a panel found no connection between futures trade and a rise in spot price, analysts said.

"I don't think one can conclusively say futures impacted prices," Abhijit Sen, head of a government panel on futures trade, told reporters after submitting a report to the farm ministry on Tuesday.

The panel headed by Planning Commission member Abhijit Sen was set up in early 2007 to probe links between futures and rising food prices, after futures trade in rice, wheat, urad and tur was banned for a percieved role in stoking inflation.

This trigerred fears government may ban futures trade in essential commodities, prompting many participants to stay away from the markets in the recent past.

Left parties, allies of the federal government, have been demanding a ban on commodity futures trade to arrest inflation, which is near three-year highs.

"I don't see any ban in futures trading. The government will go with this report. Participation in agri commodities will increase especially in pulses and oilseeds," said Harish Galipelli, head of research with Karvy Comtrade Ltd.

The National Commodity and Derivatives Exchange, which manages most of agriculture futures trade in India, was the worst hit, with daily average volumes declining to about 20 billion rupees in March-April from 35 billion rupees in Jan-February.

IntercontinentalExchange Inc (ICE.N: Quote, Profile, Research) (ICE) and Goldman Sachs Investments (Mauritius) I Ltd hold 8 percent and 7 percent respectively in NCDEX.