India's exchanges not ready for rice futures relaunch

NEW DELHI (Reuters) - India's commodities exchanges are not ready for the relaunch of rice futures as garnering liquidity in contracts is difficult, the market regulator said.

"It is difficult to get liquidity in rice futures because of number of varieties...to create a benchmark contract in rice is difficult," the chairman of the Forward Markets Commission (FMC) B.C. Khatua said on Wednesday.

"We will try to bring it back when exchanges are ready and (the) government gives approval."

The federal government, which suspended futures trade in rice in February 2007, had constituted a committee to study the link between futures and spot prices. The Abhijit Sen committee had later said there was no conclusive evidence between the two.

Khatua said he disagreed with the idea that futures trade was stoking food inflation. Instead, it was the demand-supply mismatch that was causing price rises, he added.

Separately, Khatua said he expects futures turnover in the current financial year to end-March at 110 trillion rupees ($2.41 trillion) versus 77.64 trillion rupees a year ago.

Volumes in the commodity futures market so far in the current fiscal year stood at 88 trillion rupees, 80 percent of the estimated full-year turnover.