Say physical traders require licence, face stock limits; plan to move court.
Disparities in norms between futures and spot trading in sugar may force traders in the physical markets to move court.
Physical traders say they require a mandatory licence, with a stock limit of 200 tonnes. However, any person can purchase or sell sugar without a licence on commodity exchanges in futures trading. The limit on commodity exchanges is 8,000 tonnes for a single month and 20,000 tonnes on a cumulative basis.
Traders, who met in Pune, said they might petition the Bombay High Court in a day or two. They said they were also concerned at the volatility in futures trading, which resumed from December 26.
Yogesh Pande, founder-president of the Maharashtra Sugar Brokers & Traders Association, told Business Standard: “Anyone who intends to take physical delivery on exchanges or deliver sugar on commodity exchanges cannot give or take delivery of more than 200 tonnes. This gives those engaged in futures trading an upper hand. This is visible from data on futures trading, wherein prices have been pulled down from Rs 3,140 per quintal to Rs 2,747 per quintal in the past one month.”
Himmat Asbe, a physical trader from Solapur, said they wanted equal opportunity. The Forward Markets Commission has also been apprised.
He said the issue became more serious after the central government declared a 1.7 million-tonne non-levy sugar quota, including 670,000 tonnes for Maharashtra, for January. It was the highest quota announced by the central government and led to heavy short-selling on commodity exchanges, severely impacting physical trading. This led to a drastic fall in prices in Maharashtra and non-lifting of 250,000 tonnes in the state and about 500,000 tonnes nationally, he said.
The central government, however, accepted the sugar industry’s plea to extend the non-levy quota up to February 15. This averted penal action on mills, said an official of the Federation of Cooperative Sugar Factories in Maharashtra, representing 150 mills.
A senior official of a commodity exchange, who did not want to be named, said “There is a disparity. It is largely due to the enforcement of the Essential Commodities Act and the Forward Contracts (Regulation) Act. However, the matter has already been taken up by the Forward Markets Commission with the government. It is up to the government to take necessary action.”
UP cuts output forecast
Reuters adds: India's biggest cane producing state has cut its sugar output forecast to 6 million tonnes in the new season, 3.3 per cent lower than a previous estimate, government sources said on Monday. Lower recovery of the sweetener from the crop and poor cane yield were the main reasons behind the reduced output forecast for Uttar Pradesh state, they said. The state produced 5.2 million tonnes of sugar in the previous year — roughly a quarter of India's total sugar production.
