Sugar futures in India, the world’s biggest consumer of the sweetener, began trading for the first time in 19 months after a ban ended.
M-grade sugar for January delivery started trading at 3,049 rupees (US$67) per 100kg on the National Commodity & Derivatives Exchange Ltd and was at 3,035 rupees at 11:01am in Mumbai, India.
India banned sugar futures in May last year after global and domestic prices surged as supplies failed to keep pace with demand. Sugar production in India, the world’s second-largest producer, is forecast to exceed usage this season for the first time in three years, spurring exports.
“The price will be decided by market forces not by speculation, but it will solely depend upon how much liquidity gets into the market,” said Sanjay Tapriya, chief financial officer at Simbhaoli Sugars Ltd, a 75-year old mill. “At least there will be some price discovery, which will help us.”
Sugar production in India may rebound to 24.5 million tonnes in the year started Oct. 1, from 18.9 million tonnes a year ago, according to government forecasts.
Multi Commodity Exchange of India Ltd was to also start sugar futures yesterday, according to spokesman Suman Das Sarma. ACE Derivatives & Commodity Exchange Ltd, backed by Indian billionaire Uday Kotak, said in a statement on Friday it was to offer a sugar futures contracts beginning yesterday.
“This contract will provide an effective hedging platform, and will be useful for sugar traders, brokers, millers and bulk consumers,” ACE chief executive officer Dilip Bhatia said in the statement.
Sugar futures in New York, a global benchmark, more than doubled last year and have advanced 26 percent this year. The commodity reached a 30-year high on Friday.