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Dhimant Bhatt

Mumbai , May 6

FUTURES prices of medium grade sugar at the NCDEX have declined by about Rs 100 a quintal in the last eight trading sessions, mainly on speculative sales against extremely cautious buying.

Medium grade sugar prices of the current May contracts (expiring on May 20) were down Rs 101 or 6 per cent to Rs 1,730 a quintal on Friday from Rs 1,831 on April 28, while spot prices at Muzzafar Nagar market were down Rs 20-25 to Rs 1,775 per quintal.

Spot trading at Muzzafar Nagar market has come to a halt in the last four days due to uncertainty as speculative activities are driving the futures market.

"Normally, spot market influences the futures market but this time, the situation is different," a trader said.

May contract prices are ruling lower by about Rs 40 a quintal over spot prices.

"There are more sellers than buyers in futures market. As a result, the market has turned weak," a leading trader at Muzzafar Nagar said.

During the last three days, trading volume on NCDEX has increased. On Friday, it was 42,620 tonnes from 11,180 tonnes on Tuesday.

The May contracts prices touched a low of Rs 1,724 a quintal during intra-day trade. The prices touched a high of Rs 1,997 a quintal on March 2.

Spot trading at Vashi (Navi Mumbai) market also came to standstill this week. Spot prices were largely stable at Rs 1,770-1,800 a quintal for small grade and Rs 1,795-1,845 for medium grade during the past three days.

"Futures prices have come down sharply this week. As a result, trading volume at wholesale level have been affected badly. Sugar mills are offering steady quantity regularly but retailers and bulk consumers are more cautious as prices are on decline," a local trader said.

At the beginning of this month, traders had expected the prices to rise in the spot market as the free sale quota announced by the Government for the was the lowest in past one year.

"Overall demand from retailers and bulk consumers is good as against steady supply from sugar mills. Prices are moving downward, despite the fact that the May quota is lower than last month and the same month last year," an analyst said.

The Government announced 38 lakh tonnes of free sale quota for the summer quarter (April-June). Of this, free sale quota of 12 lakh tonnes has been released for April and 11 lakh tonnes for May.

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