Sugar stocks declined sharply in today's trade as the FMC (Forward Markets Commission) suspended trading in sugar futures till December 31, 2009.
Amidst concerns that speculation is driving up sugar futures, the commodities regulator, the FMC, banned sugar futures with immediate effect till December 31, 2009 to curb sugar prices at the wholesale and retail levels.
Sugar prices at the retail level were up by Rs 4-7 per kg. Over the long term, sugar prices were expected to rise due to demand-supply mismatch in FY10.
The production was expected to be 15 million tonnes against 26 million tonnes last season. A higher SMP(Statutory Minimum Price) of about Rs 107 per quintal may put upward pressure on prices.
Reacting to the development, SP Tulsian of sptulsian.com said the move was positive for sugar stocks, fundamentally. “Domestic prices for the last couple of months have been working out based on the import parity prices. The import parity price with the rupee having strengthened to about 48 to a dollar still it works out to be Rs 24-24.50 per kg while domestic prices ex-mill are much lower than this,” he said.
“On the sentimental aspect, there could be a knee-jerk reaction but I do not think that should last more than half a day or even for a day because whenever we have seen these kinds of rise in the commodity prices, we see the exuberance in the form of speculative activity developing on the commodity exchange,” he said. “So the government must have taken this move just as a measure of caution — when prices start going up there should not be untoward speculation or volatility or the speculative movement on the commodity exchange.”
Amidst concerns that speculation is driving up sugar futures, the commodities regulator, the FMC, banned sugar futures with immediate effect till December 31, 2009 to curb sugar prices at the wholesale and retail levels.
Sugar prices at the retail level were up by Rs 4-7 per kg. Over the long term, sugar prices were expected to rise due to demand-supply mismatch in FY10.
The production was expected to be 15 million tonnes against 26 million tonnes last season. A higher SMP(Statutory Minimum Price) of about Rs 107 per quintal may put upward pressure on prices.
Reacting to the development, SP Tulsian of sptulsian.com said the move was positive for sugar stocks, fundamentally. “Domestic prices for the last couple of months have been working out based on the import parity prices. The import parity price with the rupee having strengthened to about 48 to a dollar still it works out to be Rs 24-24.50 per kg while domestic prices ex-mill are much lower than this,” he said.
“On the sentimental aspect, there could be a knee-jerk reaction but I do not think that should last more than half a day or even for a day because whenever we have seen these kinds of rise in the commodity prices, we see the exuberance in the form of speculative activity developing on the commodity exchange,” he said. “So the government must have taken this move just as a measure of caution — when prices start going up there should not be untoward speculation or volatility or the speculative movement on the commodity exchange.”
List of Sugar companies which slipped in today’s trade:
| Last | Change | ||
| 28.50 | -1.80 | -5.94 | |
| 27.90 | -1.70 | -5.74 | |
| 42.25 | -2.20 | -4.95 | |
| 73.50 | -3.80 | -4.92 | |
| 28.15 | -1.45 | -4.90 | |
| 39.85 | -2.05 | -4.89 | |
| 67.50 | -3.15 | -4.46 | |
| 56.00 | -2.25 | -3.86 | |
| 68.55 | -2.70 | -3.79 | |
| 38.00 | -1.15 | -2.94 |
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