SUGAR Trading
NCDEX SPOT and Futures Markets
18 Dec, 2010 Mumbai
NCDEX – Agri Leadership

90 percent market share in Indian Agri commodity futures

Global Leader in Spice Futures

NCDEX benchmark prices - disseminated and tracked widely

Average daily volumes of Rs 4100 Crores (USD 900 Million)

Strong large trading community - 700 centres, 850 members
with 20,000 terminals throughout the country

Accredited warehouse network - 80 delivery centers; 1.3
million MT capacity, with robust assaying facilities.

Physical deliveries of over 50,000 tonnes every month
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NCDEX – Strong Institutional Ownership
Institution
Share
NABARD
15 %
NSE
15 %
LIC
15 %
CRISIL
5%
IFFCO
12%
PNB
10%
Canara Bank
8%
Goldman Sachs
4%
Intercontinental Exchange
4%
Shree Renuka Sugars Limited
12%
INDIAN AGRI COMMODITY MARKETS –
LARGE ECONOMIC SIGNIFICANCE IN INDIA
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
47% of GDP is commodity related

21% of GDP is from agriculture

Over 65% of 1 billion people depend on agriculture
directly

Over 7500 physical spot market yards
A NEW WORLD OF COMMODITY FUTURES

Increased volatility of commodity prices

Resource products – Iron Ore, Crude oil, Coal

Agricultural products - Foodgrains and Fibers

Precious Metals - Gold

Price Discovery shifting to India/China due to demand
dynamics

Increased international linkages, but renewed fears of
protectionist policies

Major regulatory changes underway following the
financial crisis in the west
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Managing Risks in Volatile Markets
6

Introduced for futures trading at NCDEX in July 2004

NCDEX - the leading exchange trading Sugar futures
in the country

Futures contract offered for Sugar M and Sugar S at
NCDEX.

Price discovery and price risk management tool for all
value chain participants

Nationwide participation
1600
1500
1400
1300
1200
1100
1000
17-Jun-07
06-Aug-07
25-Sep-07
14-Nov-07
NCDEX Price
03-Jan-08
LIFFE Price
Correlation coefficient = 87.46%
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22-Feb-08
12-Apr-08

Price Discovery is essential for decisions on
sowing, storing, selling and buying

Information is asymmetrically distributed
across the world

NCDEX provides a common platform for all
such information to be reflected at one place

Any change is continuously reflected in the
prices and spreads on the Exchange
Sugar Futures Ban
Note: Spot Price- Sugar M Kolhapur
Source: NCDEX
OI & DELIVERIES
Source: NCDEX (Sugar M)
VOLUME COMPARISON NCDEX VS LIFFE

LIFFE Sugar # 5 volumes (MT)
Month
Jan 2009 Feb 2009 March
2009
April
2009
May
2009
Volume
(MT)
32.7
lakhs
38.6
lakhs
30.5
lakhs
32.3
lakhs

36.3
lakhs
NCDEX Sugar M200 Volumes (MT)
Month
Jan 2009 Feb 2009 March
2009
April
2009
May
2009
Volume
(MT)
14.5 lakhs 15.1 lakhs 14.5 lakhs 21.7 lakhs 12.4
lakhs
FUTURES TRADING – PROSPECTS FOR GROWTH


Wider Participation through increased
awareness of risk management and
commodity trading opportunities
FCRA changes approved by Cabinet and
tabled in Parliament – likely to be
approved in the next session



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Will allow for options and index instruments
to be traded
Will allow Financial & Institutional players to
participate.
Improved information flow and trading
access from commodity research and
brokerage firms
GLOBE
Commodities
Spot Sugar
NCDEX SPOT SUGAR E AUCTION

Time and Quantity pre determined and conveyed
to market

No physical gathering of participants

Healthy competition, No geographical limitations

Complete transparency

Electronic Data - No paperwork effort/costs

Efficiency of money as participation in multiple
bids possible
NCDEX SPOT – Increasing Participation

Daily E auctions of various mills in Kolhapur
and Sholapur

NSPOT presence in sugar - Rajasthan, MP ,
Gujarat and Maharashtra.

No of Sugar E auctions – 50

Clearing and Settlement system - Margining
system in place.

Induction of reputed cooperative and Private
Mills with NSPOT
NSPOT INDIAN AUCTION - PROCESS

Specify Open Sale Quantity
Sugar Mill would specify the warehouse, location, stack numbers or other
suitable identifiers for each of the lots to be sold.

Schedule and Approval
NSPOT & Sugar Mill would mutually draw up a schedule of e-auctions

Publication of Auction Schedule
NSPOT would announce the e-auctions schedule

Inspection at Warehouses
Inspection facility would be available after payment of enrolment fee by
registered and approved buyer.
NSPOT E-AUCTION BENEFITS

Better Price Transparency

Pan India Geographical Reach (Market share)

Local Cartelization avoided

Counter party risk mitigation

Reliable alternative marketing and distribution
channel.

Audit trail possible
NSPOT E-AUCTION BENEFITS ….

Efficient real time Tender Process

Equal and fair chance to all the participants.

Convenience for buyers/Sellers.

Efficient and quick Settlement with flexibility

Minimal transaction charges

Avoiding manual intervention and biasness
THANK YOU
Contact details
Dept
Location
Mobile
e-mail
Srikanth Ambati
NCDEX
Mumbai
9930007549
srikanth.ambati@ncdex.com
Bharat Jakati
NCDEX
Mumbai
9833255348
bharat.jakati@ncdex.com
Nishanth Sirohi
N SPOT
Mumbai
9820357126 nishant.sirohi@ncdexspot.com
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