The edible oil industry body, the Solvent Extractors’ Association of India (SEA), has requested the government to lift the ban on futures trading in key agricultural commodities, specifically crude palm oil (CPO) and soybean oil. In a letter to central ministers, SEA President Sanjeev Asthana emphasized the crucial role of a robust futures market in managing price volatility and fostering market stability.
SEA’s appeal, addressed to five prominent ministers, including Home Minister Amit Shah and Finance Minister Nirmala Sitharaman, argues that the prolonged suspension of futures trading—initially imposed in December 2021—has significantly impacted the agricultural sector. The ban, which restricts futures trading in seven commodities, was recently extended until December 20, 2024, per a directive from the Securities and Exchange Board of India (SEBI).
“The industry was hopeful that the suspension would be lifted to enable smoother operations, but the continuation of this restriction has further weakened an essential risk mitigation tool,” Asthana said.
SEA’s letter highlighted that current soybean prices are trading below the government’s minimum support price (MSP) of ₹4,892 per quintal, while rapeseed prices are only marginally above the MSP of ₹5,950 per quintal, underlining the need for market mechanisms that support price stability.
SEA emphasized that futures trading in internationally traded commodities like crude palm oil and crude soybean oil is essential to mitigate price volatility and operational disruptions. “Historically, futures markets have proven effective in supporting price mechanisms, reducing the government’s need to intervene by purchasing under the Market Intervention Scheme,” Asthana added.
The association urged the government to direct SEBI to resume futures trading in all commodities or, at a minimum, reinstate it for globally traded oils, asserting that the current policy deprives both the industry and government of crucial pricing data and stability.