India may relaunch sugar futures soon

According to country’s commodity markets regulator Forward Markets Commission (FMC), it may allow derivatives exchanges to re-introduce sugar futures next week.

FMC chairman B C Khatua said the Commission has convened a meeting with stakeholders of the sugar industry by the end of this week to get their feedback and based on their response may allow exchanges to restart futures trading in sugar.

The first contract will possibly be available for trade in December for delivery in January. But FMC is not willing to allow too many months' contracts in seasonal commodities like sugar.

Contracts over four to five months in such seasonal commodities had proved largely illiquid, which opened room for any entrepreneur with malafide intent. Hence, those limited period contracts, which attracted fair liquidity would be allowed, Khatua said.
Earlier, agriculture minister Sharad Pawar had also batted in favour of sugar futures. In May 2009, the government had banned sugar futures to control abnormally rising prices.

FMC is also working to allow globally-linked commodities with adequate supply-demand balance in India to trade in the second session. "Traders have not forged any such idea. But I feel such ideas are thinkable," Khatua said, responding to a query on edible oil trade to be allowed in the second session.