Sugar futures resumed on Monday on Indian commodity exchanges after a gap of more than a year, with a big bang, garnering almost the same volumes as it did before futures were suspended in the wake of rising prices. Sources said strong investors interest amid rising prices lead to good volumes in all the exchanges where it has been traded.
The most-active sugar M-grade for January delivery on the NCDEX was trading at Rs 3,044 per 100 kg, after hitting a contract high of Rs 3,079. ?There has been significant participation in the sugar futures as traders, processors and everyone concerned with the trade was waiting for the market to restart,? Vijay Kumar, chief business officer of National Commodity and Derivatives Exchange of India told FE.
Before futures in sugar was suspended, the commodity used to contribute 8-10% of the total daily average volume at the exchange.
Till noon, the front-month sugar contract on NCDEX garnered a volume of around 20,000 tonne and by close it rose to around 27,530 tonne, valued at approximately 84 crore.
Before, suspension, sugar futures on the exchange used to garner volumes in the range of 50,000-100,000 tonne. The six-month average volume of sugar futures in 2009 was around 19,050 tonne. In MCX, the contracts garnered an average volume of 9,240 tonne valued at approximately Rs 30 crore.
Before, suspension, sugar futures in MCX used to garner volumes of around Rs 6-7 crore, while in NCDEX it was around Rs 100-127 crore ?We hope by next week, trading will more stabilize and investors would get further confidence in the market,? Vijay Kumar of NCDEX said.
Prasoon Mathur, senior analyst, agriculture research at Religare Commodities Research said that good volumes and open interest signify that liquidity is strong in both NCDEX and MCX. ?Market sentiment is good and is expected to continue the same in the coming days as well,? he said.
India banned trade in sugar futures in May 2009 when prices were rising as it faced shortages. The government finally decided to allow them again from the end of September. India, the world’s second-biggest producer after Brazil, was forced to import large quantities in the past two years as farmers switched to other more profitable crops and a severe drought hit cane output in 2009.
The government, fighting to control double-digit inflation and protect its core voter base among the poor, has a track record of intervening to control prices. Its latest move was to cut import duties and ban exports of onions.
Interventions mar trading volumes on exchanges like NCDEX, which depends on agri-commodities for most of its business.