Is Inflation & Commodity Futures linked

Its been over weeks that the world may world faces food crisis as worst US drought in more than 50yrs pushes agricultural commodity prices to record highs.  The scenario is same across the globe and we have some political statements that  India has not reached drought situation: Sharad Pawar – He is just waiting for the next big commodity import scam as reported by the leading news paper from India.


The debate over the future commodity trade is never-ending , Govt of India has taken their favorite step and set up a committee which is headed by the planning commission member Dr Abhijit sen. The committee will study the link b/w the future market and the volatility in the spot prices of the agriculture commodities. The inflation is hovering around 7% the ban on futures of wheat, rice and other pulses if lifted then present govt will be in trouble.

I don’t know how much affect does the future market has on the inflation, Future reflect what the investor think will happen, Futures are the projections been made by the people who are trading on the basis of information they have. So basically its predicting the prices now if the prediction is taken by the various other investor it might affect in the spot market. Inflation prevails in the spot market not in the future market.

The Indian commodities market works upon the wish and will of the Indian politicians, not by the key factors like demand and supply. Forward market commission is the body which is fighting for its rights and other 3 national exchanges were the commodities are traded. Lets hope that the committee should come out with strong recommendations for the benefit of common man and the exchanges.


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