 "Govt for suspending futures trade in sugar")
The food ministry has recommended suspending the futures trade in sugar and imposing stock holding limits on mills in view of rising prices as the festival season approaches.
Sugar traders and wholesalers already face stock holding limits. The NCDEX, an exchange where sugar futures are traded, has increased the buying margin to 45 per cent. Food ministry sources said sugar production was expected to decline in the season starting October and “a need was felt to increase supply to the open market to control retail prices”.
The retail price of sugar has risen to Rs 40-42 a kg, Rs 3-5 a kg higher than three months ago, on fears of a shortage. Traders feel sugar production in the 2016-17 season may be lower than the previous year’s 25 million tonnes. According to the Indian Sugar Mills’ Association, sugar stocks with mills were 13.5 million tonnes in June, lower than the 18.1 million tonnes in April. Food ministry officials believe mills are holding on to stocks, expecting prices to rise during the festivals.
Sugar traders and wholesalers already face stock holding limits. The NCDEX, an exchange where sugar futures are traded, has increased the buying margin to 45 per cent. Food ministry sources said sugar production was expected to decline in the season starting October and “a need was felt to increase supply to the open market to control retail prices”.
The retail price of sugar has risen to Rs 40-42 a kg, Rs 3-5 a kg higher than three months ago, on fears of a shortage. Traders feel sugar production in the 2016-17 season may be lower than the previous year’s 25 million tonnes. According to the Indian Sugar Mills’ Association, sugar stocks with mills were 13.5 million tonnes in June, lower than the 18.1 million tonnes in April. Food ministry officials believe mills are holding on to stocks, expecting prices to rise during the festivals.
The trade representative quoted above also suggested allowing import of raw sugar under advance licence. Sugar imported under this arrangement must be exported after refining within six months, but the representative said this period could be extended to 36 months so that sugar could be sold locally during scarcity. The NCDEX raised the margin on the buy side for sugar significantly late last evening. The exchange said the total buy side margin would be raised to 45 per cent and the sell side margin to 15 per cent from Thursday to discourage long-buy positions in sugar futures.