The high court here has been approached on the different norms applicable for traders engaged in physical trading of sugar, as opposed to futures trading.
The Maharashtra Sugar Merchant & Brokers Association, representing the physical traders, has argued that the high volumes on the commodity exchange due to the different norms are affecting the price. Its petition appeals for uniformity in the treatment of both types of traders.
The petitioners said this was necessary as physical traders are barred from holding more than 200 tonnes of stock and need a licence, too. While, those in the forward market can trade in sugar up to 8,000 tonnes at a time, irrespective of any mandatory license. The Union government, its ministry of food & consumer affairs, the Forward Markets Commission and the National Commodities & Derivatives Exchange have been sought to be made respondents by the petitioner. The court is expected to hear the petition during this week.
The petition says physical traders also have to take delivery of sugar within a specified time limit prescribed by the Union government’s Directorate of Sugar. Stock not listed is sequestered for sale as levy sugar, under the Public Distribution System, at a lower price. While, if a futures market trader fails to take delivery on specified dates, he can get away by paying a nominal penalty.
The petition argues that the intra-day volatility in prices of sugar in exchanges affect the physical trade. So, there is an extremely high trade in the futures market but the physical delivery effected against this is extremely low. Based on NCDEX data in respect of the contract expiring on January 20 this year, the petition says the trading volume in sugar was around Rs 804 crore, whereas the physical delivery was only of 2,700 tonnes, which when converted into value terms is around Rs 8 crore.
