After more than a year, commodities market regulator, the Forward Market Commission (FMC) will allow sugar futures to start from October 2010 in view of expected bumper production of the sweetener next year.

Trading in sugar futures was suspended in May 2009 as retail prices spiked on the back of sharp drop in production.

?Sugar futures trading would be allowed from October when the new marketing season starts,? Reuters news agency reported quoting BC Khatua, chairman of commodities market regulator, the Forward Markets Commission on Wednesday, adding that the regulator will grant permission to exchanges to resume futures trading in sugar as and when they seek it.

Later while talking to newsmen, Khatua also indicated that the regulator was considering resumption of tur dal futures, trading in which was suspended in 2007 also because of expected rise in production.

Meanwhile, sugar millers reacted positively to the announcement and said it would allow hedging against possible price slides.

?Now with much higher production expected next year, it is a welcome move. It will give some certainty to the producers and provide a platform for hedging,? said Narendra Murkumbi, managing director of Shree Renuka Sugar, the country’s top sugar refiner.

Prakash Naiknavare, managing director of Maharashtra State Cooperative Sugar Factories Federation, said: India is poised to produce a bumper sugar (crop) in 2010-11. There is going to be pressure on prices. Futures are one of the effective ways to safeguard (against a) price slide.

India, the world’s second-biggest producer after Brazil, was a large importer of sugar in the past two years as farmers switched to other crops and a severe drought hit cane output in 2009.

But this year, normal monsoon rains and higher cane planting have raised expectations of surplus production?even though a delayed withdrawal of the monsoon could pose a threat. In July, agriculture minister Sharad Pawar invited sugar millers to discuss lifting state controls on the heavily regulated sugar sector.

Meanwhile, on the growing number of commodity exchanges and a cap on them, FMC chairman said that ideally India should have 6-7 commodity futures exchange.

?We have received around eight applications and are considering all of them,? Khatua said.