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After Brazil, it’s India to produce the largest amount of sugar in world. But the two last years, saw a completely different picture of this fact as sugar was being imported in India during this time. This made Government to put a ban on sugar futures for six months in May 2009 to control its price. This ban was then extended.
Now, after 19 months the ban has been lapsed. From Monday onwards, Indian commodity exchanges can re-start sugar futures. There can be six futures contracts from January to June. The reason for this permission is that against the 23 million tonnes as required, the estimated production is about 25 million tonnes. It’s already been permitted by Government to export 500,000 tonnes of sugar without any restriction.
On January 7, sugar price hit the highest of Rs 3,972.3 per 100 kg. But with the increased productivity, it has now fallen by about 28%. Sugar price at Kolhapur in Maharashtra, fell by 0.3% to be available at Rs. 2,874 per kg.
It’s expected that the futures will definitely stabilize sugar price. The reason being, if export of sugar will be limited to certain fixed amount by the government, there will be surplus amount of sugar available in local market which will make the sugar price fall and thus attract millers.
The commodity exchanges to get permission for sugar futures are National Commodity, Multi-Commodity Exchange, and Derivatives Exchange and ACE Commodity Exchange.
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