Turnover on commodity exchanges in India, the world’s biggest gold consumer, may rise 43 percent to a record this year on higher prices and volumes, the industry regulator said.

Commodities worth 75 trillion rupees ($1.63 trillion) may trade on
India’s 22 exchanges in the year ending March 31, up from 52.5 trillion
rupees a year ago, B.C. Khatua, chairman of the Forward Markets
Commission, said in an interview in Mumbai. The forecast compares with
his June estimate for a gain of more than 20 percent.

Copper,
sugar and lead prices doubled last year, helping raw materials post the
biggest annual gain in four decades, as Chinese demand compensated for
the slump in the world economy. Commodity bourses in China, closed to
foreigners like those in India, clocked a record turnover of $19
trillion in 2009.

“Given the limitations on international players,
and the corporates are not there in a big way, the growth has been
pretty satisfactory,” Khatua said. “In the current year the growth is
somewhere around 45-50 percent. That’s pretty good.”

Turnover on
India’s commodity bourses jumped 50 percent to 59 trillion rupees
between April 1 and Jan. 15, the commission said today. Contracts worth
3.65 trillion rupees changed hands in the two weeks ended Jan. 15, 55
percent more than the 2.35 trillion rupees a year earlier, it said.

China’s
three commodity exchanges clocked a total volume of 2.15 billion
contracts valued at more than 130.5 trillion yuan last year, the China
Futures Association said on Jan. 4, as the country imported record
amounts of materials from copper to iron ore, making up for slack
demand in the U.S. and Europe.

Record Inflow

The S&P GSCI
Index of 24 materials jumped 50 percent last year, the most since at
least 1971, and commodities drew record $60 billion in investments,
according to Barclays Capital. The Reuters/Jefferies CRB Index of 19
commodities rose 23.5 percent in 2009, the most since 1979.

“The
markets have become a little more volatile than last year,” Khatua
said. “In a more volatile market it tends to generate more volumes.”

New
York gold futures reached a record $1,227.50 an ounce on Dec. 3 and
have gained 19 percent since March 31. Silver jumped 34 percent and
crude oil is up 53 percent in the period. Raw-sugar posted its biggest
annual gain since 1974 last year, and reached the highest price in 29
years in New York yesterday.

Commodities are forecast to beat
bonds and stocks this year as faster growth and high prices stoke
expectations that central banks will lift rates to curb inflation.
Goldman Sachs Group Inc. forecast Dec. 3 that the S&P GSCI Enhanced
Total Return Index would climb 17.5 percent in 12 months, led by
advances of 25 percent in energy and 15 percent in metals.

Food Costs

High
raw material costs and drought-induced shortages in rice, pulses, sugar
and vegetables in India have pushed up food inflation to the fastest
pace since Dec. 1998. Still, there hasn’t been a demand from lawmakers
to expand a ban on sugar futures to other commodities to cool prices,
Khatua said.

The regulator last month extended a ban on sugar
futures to September, and in December 2008 ended a seven-month
restriction on trading rubber, soybean oil, potatoes and chickpeas
after inflation slumped from a 16-year high in August that year.

“This
time around I’ve noticed that from the responsible quarters nowhere is
there a demand that futures be banned,” he said. Studies have shown
that a trading ban doesn’t help in curbing food prices, he said.

The
Multi Commodity Exchange of India Ltd., the world’s third-biggest
bullion bourse, and local rivals such as the National Commodity &
Derivatives Exchange Ltd., are mainly used by domestic traders,
producers and consuming companies.

Source: Bloomberg

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