FMC to allow trading in sugar futures from next month

Commodity market regulator FMC said trading in sugar futures will be allowed from the start of the next month.

Commodity market regulator FMC said trading in sugar futures will be allowed from the start of the next month but exchanges can launch contracts only for November onwards.

“The ban on sugar futures trading will lapse on September 30th. Exchanges will not be permitted to launch October contract as there would be only a few days available for trading,” FMC Chairman B C Khatua said.

He said trading would resume from October 1 with the launch of the contract that will expire in November and onwards. As there would be only a few days for expiry of the October contract,it was better to launch the contracts for November,he said.

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According to commodity market expert,it does not make any sense to launch an October contract because participation would not be much since the contract would mature in the same month.

Futures trading in sugar was banned in May last year to control the rising price of the sweetener in the spot market.

The ban is effective till September 30th.

Last week,Khatua had said that futures trading may be permitted from next month as prices have come down sharply and the country is expecting a bumper output in 2010-11 sugar year starting.

Meanwhile,leading commodity exchanges MCX and NCDEX are ready with the sugar contracts for launch next month.

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An official with NCDEX said,”We are ready with contracts from October month onwards. We will launch the contracts as and when the FMC approves.”

A futures contract is a legally enforceable agreement for delivery of good or the underlying asset on a specific trade in future at a price agreed on the date of the contract.