India’s curb on futures trade threatens food supply chain – Reuters

India’s curb on futures trade threatens food supply chain – Reuters

MUMBAI, Dec 22 (Reuters) - India's year-long suspension of futures trading in key farm commodities is crimping the use of risk management tools such as hedging across its food supply chain, spurring inventory cuts as forward purchases get scaled back.

Monday's halt, targeting items such as soybeans, edible oils, wheat, rice, and chickpeas as authorities move to cool rising inflation, was one of India's most dramatic steps since it launched commodity futures in 2003. read more

But the ban on access to futures contracts may fuel volatility in domestic markets by denying traders the tools crucial to planning decisions, forcing them to cut stocks, delay long-term purchases and sales, and even limit imports.