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National Commodity and Derivatives Exchange (NCDEX) today launched sugar contract, which will be available for October onwards contracts and is aligned with the global market so that industry can protect itself from volatility in prices.
The new contract has been designed in partnership with apex industry body Indian Sugar Mills Association (ISMA), NCDEX said in a release issued here.
Currently, NCDEX offers sugar contracts expiring in June 2014, July 2014, August 2014 and September 2014 for trading.
The modified contract will be applicable for all contracts expiring in and after October 2014.
This will allow mills to benefit from price discovery and risk management for a longer term.
"India is the world's largest sugar consumer and second largest producer. Therefore, its prices hold significant importance in the global market. We expect the redesigned contract to add tremendous value to all stakeholders," NCDEX Managing Director and CEO Samir Shah said.
The contract has now taken a higher quality of sugar as its basis so that the end consumer industry, like food and beverage companies are encouraged to take delivery, it said.
The Exchange has also withdrawn staggered delivery in the contract as per the industry demand.
Further the sugar mills can deliver sugar directly to the buyers' premises under the 'direct delivery' option, which has also been made available.
"We expect better participation in the futures contracts, by all stakeholders, which will improve volumes and throw up a better price discovery mechanism. We expect the new contracts to equip sugar producers better to take advantage of the global commodities market, as and when opportunities come up," ISMA Director General Abinash Verma said.
