The BOOE, so far has not been able to finalise the ground rules for international futures in castoroil despite the clearance given by the Forward Market Commission more than a year ago.

The international segment at BOOE was expected to be operational by April this year, however, the high level team looking into the project, has recently circulated the draft bye-laws for the Prime Commodities Clearing Corporation of India (PCCCI) Ltd, a clearing corporation necessary for futures trading.

"We are working on the bye-lawsfor international castoroil futures," said a top source at BOOE.

"We do not want to hasten the process and end up the way the international exchange for spices has gone, more so at a time when we expect the government to permit us (BOOE) trade in futures of the entire edible oilseed complex," he added.

The Indian Spice Trade Association-International Commodity Exchange (ISPTA-ICE), Kochi, the country's first international commodity exchange, has not just failed to take off but has not even attracted a single foreign trader as its member. The FMC's repeated persuasion to the IPSTA members on the domestic segment to take up serious trading on the IPSTA-ICE, has yielded hardly any result.

Thus, the over cautious steps of BOOE are unlikely to help its office bearers and a few top MNCs engaged in oilseed related products (oils and de-oiled extractions) to kick off the international castor oil futures, observers say.

The average daily trading volumes of castorseed on the BOOE has plunged to all-time low ofaround 25 tonnes in June this year, as against the highest of 2,574 recorded in 1989-90.

At Ahmedabad Seed Merchants' Association (ASMA), another exchange trading in castorseed futures, the official trading volume is said to be 100 tonnes plus, and same at Bhabhar and Surendranagar -- the two unofficial exchanges -- that trade in castorseeds.

At all these centres, the unofficial trading volumes are over five times the official volumes. This is because most players route their transactions unofficially to avoid taxes due to the government. For the fiscal year 1997-98, the average daily volume in castorseed on BOOE was placed at 133.81 tonnes, down from around 1,000 tonnes in 1996-97 and around 555 tonnes in 1995-96.

Of the 600-plus members, hardly 40-odd membership cards are said to be operational, of which active members are around 10. These ten members ensure that the exchange gets the bare minimum trading volume so that the bourse does not lose the permanent trading licence granted by the FMC.

Thedaily clearing system introduced on BOOE in early 1997, kept traders away from officially trading as it affected their liquidity (most castorseed deals are done outside the exchange). In addition to this, the wild price fluctuations, more so in the last and the current year, following lower-than-expected crop followed by cyclone at Gujarat's port regions also kpet the volume at its low.

Over the past couple of years, futures trade in castorseed shifted outside Mumbai to Gujarat's Bhabhar and Surendranagar regions -- both illegal trading centres thriving near the legal trading centre at Ahmedabad.

The country's castorseed economy is hardly around 10 lakh tonnes (seeds -- 7.5-8.0 lakh tonnes, 3 lakh, or 40 per cent of seeds, is castoroil, while the balance is de-oilded meals).

Thus, the overall quantity is said to be too small to attract the international palyers. If futures are permitted in castoroil, handful of traders could end up controlling the international exchange.

What is more, all these andother related factors have attracted controversies even before the international segment on BOOE has kicked off.

Looking at the fate of IPSTA-ICE, the castoroil industry finds itself divided on the issue of success of the international castoroil futures.Shvetal Vakil, general manager at Hindustan Lever said in an interview: Apprehensions that low physical volumes may not bring about liquidity to international futures trade. This could change once the international contract is operational as more and more players would operate on the exchange.

However, a large section in castoroil industry feels it otherwise. Says Kishore Tanna, director, Jamnadas Madhavji International, one of the leading firms engaged in exporting castoroil, groundnuts and other agroproducts: "India's prime position as one of the few leading exporters of castoroil -- apart from Brazil and China -- India's castoroil production is too small to warrant trading in international futures. "Instead of international futures for castoroil,BOOE office bearers should instead demand domestic futures which will help exporters make better informed commitments to their foreign buyers."

Four reasons, says Tanna, are not in favour of BOOE for international castoroil futures:

One, The international exchange is unlikely to change our tendency to buy cheap and sell dear which is not benefiting the farmers at all.

Two, the domestic community trading in castorseed and oil lacks perspective on international trading.

Three, because of the small quantity of castoroil available worldover --around three lakh tonnes--there is no international futures even in the large importing countries like Holland and Germany.

Four, Gujarat, and not Mumbai, could be a better place for international castoroil exchange. Castorseeds are grown mainly in Gujarat, attracting oilmillers and exporters of castoroil, to set up related facilities in and around the producing regions. This has therefore, seen trading in castorseed shift to Gujarat from Mumbai over the past fewyears. Thus, if deliveries are forced in Mumbai, traders would incur additional expenses.

Lastly, Tanna feels: "International exchange for any commodity can be successful only if there are more than 3-4 international trading centres -- which offer variety in prices."