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Dhimant Bhatt

Mumbai , Sept. 15

AFTER rubber and pepper contracts, the National Commodity & Derivatives Exchange Ltd (NCDEX) has also made compulsory delivery in sugar futures.

The exchange has made modifications in the delivery specifications in sugar M-grade (Muzaffarnagar) and sugar S-grade (Kolkata) futures contracts which will be applicable for all contracts expiring in and after December 2005, except April 2006 contract which is currently available for trading with sellers right to give delivery, as per a latest circular.

The exchange on Thursday launched the December 2005 expiry contract of sugar M grade and sugar S grade (Kolkata).

"Trading in December 2005 contracts for M-grade resumed today with good market participation. The first trade was registered at Rs 1,790 per quintal and intra-day volume was about 1,570 tonnes," a broker said.

"At this point of time, I believe the change in delivery mechanism would have major impact on the market as the market is already in discount to the spot market. Number of deliveries was low in last three months," a leading miller said.

The exchange has changed the delivery centre for sugar S-grade contracts from Vashi (Navi Mumbai) to Kolkata.

"It doesn't make any difference with the change in delivery centre for s-grade contracts as Kolkata has also liquidity problem like Vashi," he said.

The seller having open interest at expiry of a contract would be compulsorily required to give delivery but if he fails to give delivery, it would be treated as default, the circular also said.

"In case of default in delivery, sellers will have to pay heavy penalty and it would be minimum 8-10 per cent," a miller said.

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