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NCDEX Unveils Globally Aligned Sugar Contract

16 June 2014

INDIA - Mumbai based National Commodity & Derivatives Exchange Limited (NCDEX), a leading commodity exchange has announced that its sugar contracts October 2014 onwards have now been aligned to the international market so that the sugar industry is able to better protect itself from volatility in global prices.

The new contract has been designed in close partnership with apex industry body Indian Sugar Mills Association (ISMA), NCDEX said in a statement.

Currently NCDEX offers sugar contracts for consecutive months up to September 2014.

NCDEX said, now it will offer deferred contracts, which means that in October 2014, contracts leading up to March 2016 will be available for trading. This will allow mills to benefit from price discovery and risk management for a longer term.

“We expect the redesigned contract to add tremendous value to all stakeholders,” Samir Shah, MD & CEO, NCDEX said.

“It overcomes almost all the weaknesses of the earlier contracts. We expect better participation in the futures contracts, by all stakeholders, which will improve volumes and throw up a better price discovery mechanism,” Abinash Verma, director general, ISMA said welcoming the new sugar contracts said.

“We expect the new contracts to provide such a platform as also equip them better to take advantage of the global commodities market, as and when opportunities come up," Verma stressed.

“With a deregulated environment for sugar sales, with no release mechanism and no guaranteed quota share of the market every month for each sugar mill, earlier fixed by the Government, better marketing strategies and informed decisions, will be the key for better returns to the sugar producers” Verma added.

The Exchange has also withdrawn staggered delivery in the contract as per the industry demand.
Additionally the sugar mills can deliver sugar directly to the buyers premises under the direct delivery option which has also been made available.

India is the world's largest sugar consumer and second largest producer. Therefore its prices hold significant importance in the global market.

NCDEX is an established benchmark for sugar prices, which play an important role in the lives of over 500,000 sugarcane farmers and 500 sugar factories in the country.

Currently, Sugar futures contracts (SYMBOL: SUGARM200) expiring in June 2014, July 2014, August 2014 and September 2014 are available for trading.
The modified contract (SYMBOL: SUGARM) will be applicable for all contracts expiring in and after October 2014.


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