After 19 months, trade in sugar futures to restart today

Futures trading in sugar will resume tomorrow after a gap of one-and-a-half years, with the country’s top two national exchanges – the Multi Commodity Exchange and the National Commodities and Derivatives Exchange – launching new contracts.

The government had banned sugar futures trading on May 27, 2009, to control rising prices of the sweetener. The ban was valid till September 30 this year, following which it was allowed to lapse by the regulator, the Forward Markets Commission (FMC).

However, despite lifting the ban, FMC did not permit immediate relaunch of sugar futures trading, as it was waiting for realistic estimates of production in the 2010-11 sugar year (October-September).

 

“We will relaunch sugar futures from tomorrow. We will offer contracts for six months from January to June, 2011,” an MCX spokesperson said, adding that delivery would be linked to the Delhi, Uttar Pradesh and West Bengal markets.

In a circular, NCDEX said three futures contracts for sugar trading would be available for January, February and March, 2011.

“The correlation between the futures contract prices and spot market prices is high. As the exchanges enable a transparent interplay of demand and supply forces, leading to efficient price discovery, the domestic sugar industry will definitely benefit from the re-introduction of sugar futures,” MCX Deputy Managing Director P K Singhal said.