As hedging desk comes up for cotton and maize, soyabean farmers in Maharashtra ask: ‘Why keep us away from futures market?’

The hedging desk for cotton and maize was established to provide training and guidance to farmers and FPOs on participating in the commodity futures market. Nevertheless, “it is going to be a bloodbath” for soyabean farmers, according to Ufade.

“Even before sowing, prices are far below the government-declared minimum support price (MSP). With no guidance on prices, it will be difficult to form any logical decision about offloading,” said Ufade.

SEBI imposed a ban on soyabean to prevent speculation in commodities, which the regulator believed was causing unusual price fluctuations in the physical markets. Market participants, however, have strongly denied this claim.

The ban remains in force, with soyabean prices trading well below their MSP for most of 2023 and 2024. This year, as Ufade said, the prices are almost Rs 1,000/quintal less than the MSP of Rs 4,986/quintal even before the sowing has finished.

For FPCs like Vikas Agro, the futures platform served as an alternative to traditional markets for offloading their produce. “Before the ban, we traded over 500 tonnes of soyabean on the platform. If anything, the price guidance available in the futures platform would have helped us to decide on whether to sell in the wholesale markets of Latur or hold on to the produce for more time,” Ufade said.

The futures platform showed price movement three months in advance. “For our members, this was the biggest advantage of the platform. If the prices in September are below our expectations, instead of soybeans, they would go for some other crop. At least there was some price point to take the call. Now it is all up in the air,” explained Ufade.

According to agri commodity analyst Dipak Chavan, the SEBI’s decision to ban futures trading was not in line with established norms or reasons. “Across the world, agri commodity exchanges have helped farmers and the agricultural community at large to develop price insights. This ban makes no sense,” he said.