Sundaresan’s point could well put rhetoric to shame, considering the fact that there are clear indications that speculation is rampant. And least of all being the memorandum to the President of India submitted on July 5, 2006, by Confederation of All India Traders, who allege, “The regulator has totally failed to monitor abnormal increase in prices of commodities in the market.” And most of all, the following:
- The closing price for mentha oil in October 2005 was about Rs.450 per tonne; and the trading volume was ‘zero’. By March 2006, the volume traded in mentha oil had skyrocketed to about 400,000 tonnes and the price had gone up to more than Rs.800 per tonne. Most surprisingly, the price fell to Rs.420 (a sign?) in the next two months. Often, the volumes traded in commodity exchanges are 40 to 50 times the actual supply of the commodity.
- In turmeric, trading went on for more than one year without any physical delivery of the commodity.
- There are persistent allegations that about 250 small commodity traders across India have committed suicide after going bankrupt in 2005-06.
- The trading volume in the commodities exchanges went up by a staggering 274% in 2005-06. The rate of growth continues to be very high even now.
For Complete IIPM - Article, Click on IIPM-Editorial Link
Source:- IIPM-Business and Economy,
Initiative:- Prof. Arindam Chaudhuri
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