Commodity market regulator Forward Markets Commission on Thursday lifted the ban on trading in sugar futures, as retail prices of the sweetener have dropped by 40 per cent since January and also buoyed by expectations of a bumper output in 2010-11.
“We have allowed to lapse the ban on sugar futures trading today,” FMC Chairman B.C. Khatua told PTI.
He said FMC would take a decision on launch of new contracts in 2-3 days after consultation with sugar industry and commodity exchanges.
The government had banned futures trading in sugar in May last year to control prices in the domestic market. India, the world’s second largest producer and biggest consumer, has been importing sugar from February 2009 to meet domestic demand.
However, the output in 2010-11 (October-September) is expected to rise to 25 million tonnes from 19 million tonnes in the current sugar year, which runs from October to September. Annual demand is 23 million tonnes.
The prices have crashed to Rs. 30-32 per kg in the retail market of Delhi from a record Rs. 48 a kg in the mid-January.
Leading commodity exchanges - Multi Commodity Exchange and National Commodity Derivatives Exchange, on whose platform sugar futures are largely traded, said that they are ready with new contracts and are awaiting FMC approval.
Yesterday, Food and Agriculture Minister Sharad Pawar had said, “The decision to lift ban on sugar futures lies with the regulator. The ball is in the court of FMC.”
At present, sugar prices in India are cheapest in the world, as the wholesale sugar prices are ruling lower at Rs. 24/kg, compared with Rs. 80/kg in Pakistan, Rs. 60/kg in Bangladesh, Rs. 55/kg in Sri Lanka and Rs. 40/kg in Brazil, he had said.
FMC, which oversees the functioning of 23 commodity exchanges, is yet to take a decision on lifting the ban on other food items - rice, urad and tur. The suspension on futures trading in these three commodities has been imposed for indefinite period since 2007.
The size of the commodity futures market is estimated to be more than Rs. 77 lakh crore.
