Sugar trade volume on the National Commodity & Derivatives Exchange (NCDEX) declined 77 per cent in the last five months on waning traders’ interest because of uncertainty over cane prices in Uttar Pradesh, India’s largest sweetener producing state.
According to the latest report by the National Institute of Commodity Research (NICR), a research wing of the NCDEX, total volume declined to 573,550 tonnes in November from 2,455,400 tonnes in July. Similarly, total turnover from sugar trade plunged 75 per cent to Rs 1,046 crore in November as compared to Rs 4,129 crore in July.
| NO MORE SWEET Sugar traded at NCDEX in 2008 | ||
| Month | In million tonne | In Rs crore |
| January | 1,512,990 | 2,310 |
| February | 1,144,740 | 1,721 |
| March | 2,052,840 | 3,317 |
| April | 754,100 | 1120 |
| May | 658,720 | 964 |
| June | 446,670 | 652 |
| July | 2,455,400 | 4129 |
| August | 2,100,740 | 3,804 |
| September | 1,147,480 | 2,028 |
| October | 849,460 | 1,522 |
| November | 573,550 | 1,046 |
| Source: NCDEX | ||
This trend was also seen early this year when volume and turnover fell heavily during the four-month period between March and June. During the period, total volume declined from 2,052,840 tonnes to 446,670 tonnes thereby declining the turnover from Rs 3,317 crore to Rs 652 crore.
“Volume would pick up December onwards with the start of the season,” Unupom Kausik, chief business officer of the country’s largest agri commodity exchange said. When traders’ confidence is shaken because of high volatility in commodity prices and they feel insecure, futures market comes to their rescue.
Traders hedge their risk in futures market to get protection from the current volatile market price. Trading currently in the range of Rs 1,900 a quintal remained rangebound during most of the five month period ending November.
Ahead of the commencement of crushing for the season 2008-09, the government of Uttar Pradesh raised the state advised price for cane procurement to Rs 140 a quintal for the current season as against Rs 125 during the last season. The move was resisted by sugar mills resulting into delay in commencement of crushing. The decision is pending with the SC.
The scenario in Maharashtra, the second largest producer, is equally terrific where farmers are reeling under tremendous pressure to clear off sugarcane to sow wheat and oilseeds in the same area. But, late season rains delayed harvesting and running of mills thereupon.
Incidentally, the government refuted the US Department of Agriculture (USDA)’s assessment of India’s possible sugar imports of one million tonnes this year. In the recent meeting, Union Agriculture Minister Sharad Pawar had denied any possibility of sugar imports.
