Rajkot commex downs shutters
Rajkot Commodity Exchange (RCX), India's only operational regional exchange for castor seeds future, has ceased its operation from Tuesday, as it failed to bag the Securities and Exchange Board of India(Sebi)'s approval for new contract.
The regulator refused to give nod for new contract, as RCX failed to comply with the guidelines. Sebi had last year asked all commodity exchanges to start online trading, create a net worth of ~100 crore and initiate de-mutualisation within two years. None of the 16 regional commodity exchanges in India have complied with the new norms. RCX said networth creation of ~100 crore was not possible for it and couldn't bear costs of online trading platform and demutulisation.
"We have tried our best to convince the regulator, but it did not understand our limitations as a regional exchange. Finally, we have decided to close futures activity," said Rajubhai Pobaru, president of RCX.
Since the first week of December, 2016, castor seed contract for December had been inactive. Traders did not participate as they felt Sebi shall not allow new contract.
The Indian Sugar Mills Association (Isma) has revised downward its estimates for sugar consumption in sugar season 2016-17 (October to September). It will review estimates for production over the next two weeks, Isma said in a note. According to sources, production estimates are also likely to be lower than its earlier figure of 23.4 million tonnes (mt).
The Union agriculture ministry’s estimate of sugar production is 22.5 mt.
“The first three months of the current season — October to December 2016 — have seen a big fall in sugar offtake. With weddings and family celebrations becoming low key affairs, and consumption of biscuits, chocolates, beverages, ice creams, etc being lower because of currency shortage, there has been a demand fall of 500,000 tonnes of sugar.
Therefore, sugar consumption in 2016-17 is being cut from 25.5 mt or two per cent growth earlier, to lower than even last year’s consumption of 24.8 mt,” Isma said.
With the average cost of production going up by ~2 a kg, price will roughly be higher at ~35-36 a kg. It is just enough to cover the cost of production. Prices have moved up in the retail market also in the past two weeks, following reports of production remaining lower than estimates.
As many as 462 sugar mills in the country have produced 8.09 mt of sugar, which is 0.4 per cent higher compared to last season.
In Maharashtra, 147 sugar mills commenced crushing operations. However, 25 of the mills have stopped crushing early. These mills are mostly in the drought-affected areas of Marathwada, Sholapur and Ahmednagar.
In Uttar Pradesh, 116 sugar mills are in operation. Fifty-six sugar mills in Karnataka are in operation as of December-end, while five mills have shut down operations. Isma is making all efforts to get the debt-restructuring plan approved from the government.
Last week, Isma officials had met the finance minister and convinced him about debt restructuring. On Tuesday, they met the Commission for Agriculture Cost and Prices (CACP), Vijay Pal Sharma, and the Prime Minister’s Office over the issue of restructuring of loans.
Till cane price is linked to sugar price, as mills have been demanding, CACP’s recommendation of using the Price Stabilisation Fund for compensating mills for lower realisation due to higher cane price shall be considered, a mill owner from Telangana said.
Due to draught in the previous sowing season, production will be lower, affecting mills’ revenues, said a south India-based mill owner.
An official with another big mill said if the government is considering importing sugar, “it will be an absolute disaster for the industry”.