Commodity market to grow by 30%; touch Rs 74,15,613 cr by 2010

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New Delhi, Jan 20 (UNI) Given the increased participation in commodity trading, the segment is expected to touch a volume of Rs 74,15,613 crore by 2010, growing at a steady speed of about 30 per cent.

According to an Assocham-e-valueserve study, the segment has expanded almost 50 times in a span of five years to Rs 33,75,336 crore in 2007 from Rs 66,530 crore in 2002.

In 2003, the size of commodities trade stood at Rs 1,29,364 crore, registering a hike of over 94 per cent, which further increased by 341 per cent to Rs 5,71,759 crore in 2004. The growth in commodities trade grew, by 276 per cent at Rs 21,55,122 crore in 2005.

However, in 2006, though the commodities trade increased to Rs 27,39,340 crore, it registered a growth of only 27 per cent over the last year.

For 2007, the trade in commodity reached Rs 33,753,36 crore and registered a growth of 23 per cent, the study says.

''The growth in commodities derivatives trading, which was at massive level in the last five years, will now register about 30 per cent growth and reached the projected level of Rs 74,15,613 crore,'' said Assocham President Venugopal N Dhoot.

He added that the commodities market size would not grow at its first phase growth rate as it was beginning but people's participation in the trade would continue and the growth rate is projected at 30 per cent by 2010.

The daily average volume of trade in commodities exchanges by December 2007 was over Rs 12,000 crore, said Mr Dhoot.

Gold, silver and crude recorded the highest turnover at the MCX, while soya oil, guar seed and soyabean soared in NCDEX.

At the NMCE pepper, rubber and raw jute were the most actively traded commodities on an average and this trend is likely to continue, the report says.

The study points out that futures trading in commodities results in transparent and fair price discovery on account of large-scale participation of entities associated with different value chains.

''This reflects upon the views and expectations of a wide section of investors related to that commodity. It provides an effective platform for price-risk management for all segments of players ranging from producers, traders, processors, exporters/importers and the end-users of a commodity,'' the study says.

The delivery and settlement procedure differs for each commodity in terms of quality implications, place of delivery, options, penalties and margins, and are defined comprehensively by the exchanges.

Members of an exchange can perform and clear transactions in only those contracts which are exchange specified and approved by the Forward Market Commission (FMC).

Talking about constraints, the study says even as the Commodity futures markets remain the strength of an agricultural surplus country like India, the exchanges are still at a nascent stage of development as there are numerous bottlenecks hampering their growth.

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