Sugar futures rise on easing of ban

Sugar futures rose by two per cent on Monday on short-covering after the the Union Agriculture and Civil Supplies Minister Sharad Pawar minister said a ban on exports may be lifted by October.

The upward movement is expected to continue till the July contract would be settled later this week.

July 2006 contract on the Multi Commodity Exchange of India (MCX) touched Rs 1,965 in early trade but profit taking pulled the price down to Rs 1,960 per quintal. August and September contracts made similar gain and touched the day's high at Rs 1,960 per quintal, Rs 1,970 per quintal respectively.

The August sugar contract was up Rs 18 at Rs 1,952 per quintal. The August contract on the National Commodity and Derivatives Exchange (NCDEX) rose by Rs 16 to Rs 1,940 per quintal.

"Short covering is currently pulling the July futures price down. As a regular practice, most trader square off their position ahead of monthly settlement, if they do not wand delivery," said a Mumbai-based trader.

Earlier the price was fuelled by the minister's announcement for lifting ban on exports.

The Centre is contemplating the idea of opening sugar exports again with an estimated exports of upto 35 lakh tonnes in the sugar season 2006-07 (October - September), said Sharad Pawar, the Union Agriculture and Civil Supplies Minister.

The government had earlier said an export ban would be in place until April 2007 to check prices.

He was speaking with the reporters on the sidelines of the function to launch venture capital fund for non conventional energy sector promoted by the government of Maharashtra and IL&FS here on Monday.

He further said, "monsoon has been good in sugarcane growing areas so far and it is estimated that, sugar production in the country is likely to reach to 220 to 230 lakh tonne at the end of forthcoming crushing season".

With the estimated opening stock of 55 lakh tonnes, the availability would go up to 28.5 million tonne in the next sugar season.

Considering the fact that, domestic consumption is around 180 to 185 lakh tonnes and last year also country's sugar production was more than 190 lakh tonnes of sugar, it is possible to export the sugar in international market, he said.

He, however, clarified that, decision to export the sugar will be taken on the basis of prices in the domestic market and government will ensure that, sugar export don't put additional burden on common man.

(This is a corrected version of an earlier story)