Sugar : Traders are less interested in futures trade
August 5, 2017 at 8:12 AM ,
Rainbow Exports
Up to last year, the Sugar futures trade has come down to below US$156250 today. In the NCDEX, the total futures trading of sugar yesterday was US$100,000 and there were only six deals. In October 2016, the NCDEX was trading at an average of US$0.454 million per day in April 2016. There were about 3,145 deals in the Sugar futures every day and standing deals of 1,44,707 tonnes were being seen. After the April 2016, the disillusionment of traders from Chinese futures started. In July 2017 daily business dropped to an average of 2 million Indian Rupee. On average, the number of deals is 5 and the open interest remains 323 tons. Thousands of deals were held every day a year ago, which are not even reaching even two points. Three deals every day in June this year, five deals in July and about six deals in August. In April 2016, there were 3,145 deals in Sugar futures each day.
Due to the reduction of interest in Sugar futures, government intervention is being considered. After April 2016, the government has made changes in the rules almost every month. When prices rise or more, the government starts imposing restrictions. In a way, the government has fixed the prices of sugar between US$0.47 per kg. and US$0.625 per kg, and only have to do business in between. In this case, people's interest has started falling from futures trading. The truth is that now there is only nominal left of Sugar futures trading. Businesses are looking at better spot trading than futures, which are working on the demand and supply norms. Ever since 2016, export ban has been stopped even after 2016. Margin in stock limit and futures market has ended business.
In order to speed up the price of sugar and prevent black marketing, the government imposed a stock limit of six months on sugar in April 2016. This was the first time that the government had put a six-month stock limit on one hand. The government has, on the contrary, demanded the implementation of this limit on the NCDEX warehouses by rejecting the demand of businessmen. After this, the traders are disillusioned with Sugar futures. After this, the government increased the import duty from 25 to 40 percent at the end of April 2016. In May 2016, 20 percent of the export was levied on exports. In August 2016, the ban on Sugar futures was talked about. In September 2016, stock limits were imposed on mills too. In September, NCDEX introduced 25% special cash margin.
GST was introduced in the country from July 1 this year, even five percent GST was imposed on sugar. To increase the prices of sugar in the domestic market, the government increased the import tariff to 50 percent last month. If traders are believed, then sugar is directly related to farmers' commodity and its prices immediately affect the common people, which becomes a political issue. The government, that is, SEBI has not stopped the Sugar futures but businessmen have become disillusioned with it.
(Source: Market TV news)
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