Mumbai: Sugar futures in the commodity market witnessed a sharp fall of Rs52 per quintal since the close on 10 April, but analysts said the decline has nothing to do with the physical market. “It is more to do with speculation rather than actual trading,” an analyst said on the continuous fall in the futures prices of the sweetener.
Like many other commodities, anybody can trade in sugar futures without commitment of delivery as one has the option to square off one’s position till the expiry of the contract by selling whatever he bought earlier.
Sugar futures for April contract dropped to Rs1,354 per quintal on 12 April in the leading agri-commodity bourse NCDEX from the Wednesday (11 April) close at Rs1,380 a quintal.
The April delivery had also slipped by Rs26 a quintal on 11 April from the previous day’s close of Rs1,406 per quintal at NCDEX.
Meanwhile, the uncertainty over export subsidy continues as the poll panel is yet to decide the government’s request for clearing the sops.
Sugar futures have dropped by Rs115 a quintal since the government’s decision to provide sops for sugar exports came late last month, the analyst said. Investors are concerned that prices would further go down due to high sugar output. The demand is also not picking up even as the summer season has started, the analyst said.
The prices had risen to Rs1,469 on 26 March with a gain of Rs13 per quintal on the back of the government’s decision to incentivise sugar exports in order to liquidate surplus stock.
The delay in the clearance to the government’s decision on incentivisation of sugar exports, due to the upcoming assembly elections in Uttar Pradesh, has led to a virtual halt in the exports as mills are reluctant to enter into any fresh contracts.
The spot prices, too, fell in the range of Rs15-20 per quintal in wholesale market.
In Delhi, sugar ready medium grade declined to Rs1,530-1,610 a quintal from Rs1,550-1,625 per quintal.