Commodity Market in India: Whose affair is it..anyway ?

Colloquium Archive Detail 

Seminar No. : 135

Date : 2010-04-19

Time : 4.00 p.m

Venue: IRMA, Anand

Speaker : Shyamal Gupta 

Details :The speculative bubble in commodities has badly distorted the workings of key markets and sectors of the economy. This bubble is causing economic discomfort for households and businesses around the world, and misery for hundreds of millions of hungry people who suddenly cannot afford a bowl of rice.

Behind each of these increases is a particular story of supply that has been constrained or demand unleashed. Whatever the number, it is hard to imagine that it was not a significant factor in skyrocketing prices that have created problems for many of the nonfinancial players who rely on the commodity futures markets for selling products, assuring adequate supplies and hedging against price fluctuations.

Many corporate (let alone farmers!) are reluctant to sell their product on futures markets out of fear they won not have the cash to meet the ever-escalating margin calls, while giant users are reportedly also cutting back on their use of futures contracts to lock in supplies. The problem for the public is that these issues can be complicated, and in a sound bite society which desires easy answers and easier solutions, the predominant view is currently biased to commodities as an investment hedge against inflation and speculators as an easy scapegoat for all the commodity woes. The more things change, the more things stay the same. “Eliminate all other factors, and the one which remains must be the truth”. Perhaps, we can take heart from Sherlock Holmes in “His Last Bow.”

The presentation shall cover the state of commodity market in India and pertinent questions that are being asked in light of the paradoxes that exist in the ecosystem.