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  • NCDEX launches internationally aligned Sugar contract for increased efficiency in hedging

    Published on May 25, 2014

    Mumbai : NCDEX, the leading commodity exchange, today announced that its sugar contracts October onwards have now been aligned to the international market so that the sugar industry is able to better protect itself from volatility in global prices. The new contract has been designed in close partnership with apex industry body ISMA which has been spearheading better risk management practices in the sugar industry after liberalization.

    Currently NCDEX offers sugar contracts for consecutive months upto September 2014. Now it will offer deferred contracts, which means that in October 2014, contracts leading upto March 2016 will be available for trading. This will allow mills to benefit from price discovery and risk management for a longer term.

    The contract has now taken a higher quality of sugar as its basis (less than or equal to 150 ICUMSA and 85% retention) so that the end consumer industry, mainly food and beverage companies are encouraged to take delivery.

    The Exchange has also withdrawn staggered delivery in the contract as per the industry demand. Additionally the sugar mills can deliver sugar directly to the buyers’ premises under the ‘direct delivery’ option which has also been made available.

    Mr. Samir Shah, MD & CEO, NCDEX said “India is the world’s largest sugar consumer and second largest producer. Therefore its prices hold significant importance in the global market. NCDEX is an established benchmark for sugar prices, which play an important role in the lives of over 5 lakh sugarcane farmers and 500 sugar factories in the country.  We expect the redesigned contract to add tremendous value to all stakeholders”

    Mr. Abinash Verma, Director General, ISMA, welcoming the new sugar contracts, said “it overcomes almost all the weaknesses of the earlier contracts. We expect better participation in the futures contracts, by all stakeholders, which will improve volumes and throw up a better price discovery mechanism. With a deregulated environment for sugar sales, with no release mechanism and no guaranteed quota share of the market every month for each sugar mill, earlier fixed  by the Government, better marketing strategies and informed decisions, will be the key for better returns to the sugar producers. We expect the new contracts to provide such a platform as also equip them better to take advantage of the global commodities market, as and when opportunities come up.”

    Currently, Sugar futures contracts (SYMBOL: SUGARM200) expiring in June 2014, July 2014, August 2014 and September 2014 are available for trading. The modified contract (SYMBOL: SUGARM) will be applicable for all contracts expiring in and after October 2014.

    Source  : Sachin Murdeshwar


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