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Sugar futures trading by October: FMC |
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Date |
22-Jun-2010 |
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Source |
business Standard |
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Reporter |
BS Reporter |
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News Id |
191 |
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The commodity market regulator, the Forward Markets Commission (FMC) plans to allow sugar futures trading by October. The trading in the commodity is banned till September 31 due to a rapid rise in the commodity’s prices in the recent past.
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“Earlier, we had planned to wait till September to have a better view about crop prospects. However, as the crop acreage is higher this year with a better production estimate, we will not extend the ban beyond September 31,” B C Khatua, chairman, FMC, said on the sidelines of a consumer awareness programme organised by the National Multi Commodity Exchange here.
He also said the production of sugar would be in the 23-24 million tonne range this crop year.The government had banned sugar futures in the commodity exchanges for seven months in May 2009 in the wake of a steep price rise in the commodity due to production shortfall. The ban was latter extended till September 2010 to further ease the price rise.The country, which produced 16 million tonnes of sugar in 2008-09, is estimated to have an output of 16-18 million tonnes in 2009-10 crop season against a consumption demand of around 23 million tonnes. However, the production estimate is pegged at 23-24 million tonnes for 2010-2011 season. Also, prices in the retail market have fallen to Rs 22-24 a kg, from Rs 50 in January this year making a case for the regulator to allow trading in sugar futures.
“We plan to allow trading in nine contracts initially and may extend it to 12 in future,”Khatua added.In the meantime, global sugar production is set to be higher in 2010-11 season on the back of expected bumper crop from Brazil, pegged at 595.89 million tonnes.
Also, according to the International Sugar Organisation, global sugar output is estimated at 2.5 million tonnes in the forthcoming 2010-11 season against a deficit of about 8.51 million tonnes in 2009-10.Talking about the volume growth in commodity exchanges in the current financial year, Khatua said, “Total turnover of the commodity market in the last financial year was around Rs 77 lakh crore, which is expected to touch Rs 150 lakh crore during the current financial year.”
He also said new national exchanges would not impact the volume growth of the existing exchanges.
“Penetration of commodity market is at a lower level as of now. So, new exchanges will boost the market volume by adding new players than eroding volume growth,”he added.
He ,however, said that each exchange has to specialise in some commodities than competing in the same space |
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