Maharashtra co-ops ask FMC, bourses for help on sugar futures

Maharashtra cooperative sugar factories have asked the Forward Markets Commission (FMC), the regulator for commodity markets,and the two exchanges, the Multi Commodity Exchange (MCX) and National Commodity & Derivatives Exchange (NCDEX), to organise statewide workshops on sugar futures.

The objective is clarify doubts on futures trading and thereby encourage more and more cooperative mills to enter into forward trades. The Federation of Cooperative Sugar Factories in Maharashtra, representing 150 mills, aims to organise workshops region-wise in the near future.

Vijaysinh Mohite-Patil, chairman of the Federation, told Business Standard: “The decision in this regard was taken at our board meeting held on Tuesday. The representatives of FMC and commodity exchanges briefed the board members on sugar futures. NCDEX has already started its delivery centres at Pune and Kolhapur, with plans for more at Solapur, Nashik, Sangli, Satara and Latur. There was a consensus among the mills that they would take a call on entering into sugar futures after gathering all details. The idea is to make sugar marketing more vibrant in the state.”

He said a large number of mills were hesitant to join forward trading. However, seven mills had begun trading in futures. “Cooperatives have realized that private sugar mills are taking due advantage of sugar futures and there is wide scope for their entry into this segment,” he said. The Federation’s move comes when the state is expected to produce 9.1 millon tonnes of sugar, after crushing 82.5 million tonnes of sugarcane.

The managing director of a cooperative mill, who desired not to be named, said mills wanted commodity exchanges to increase the stock limit to about 1,000 tonnes from the present level of 200 tonnes to allow more mills to enter sugar futures. Besides, he added, most mills want a clarification on whether or not futures was a speculative exercise. They largely prefer the traditional way of disposal of sugar through brokers and traders.