PMEX to Introduce Deliverable Sugar Futures Contract

Pakistan Mercantile Exchange (PMEX), the nation’s sole electronic platform for trading commodity futures, announced plans on Wednesday to inaugurate its first-ever ‘deliverable’ contract in agricultural products, specifically sugar, within the next two weeks.

The exchange aims to empower both buyers and sellers by facilitating price discovery, enhancing supply chain management, and curbing hoarding and speculation of this essential commodity across the country.

PMEX Chief Business Officer (CBO) Zaki Ur Rehman stated that the formal launch of Deliverable Sugar Futures is anticipated in 10 to 15 days.

He specified that the contract would entail a 30-day deliverable futures arrangement, each consisting of 12 metric tons.

The Securities and Exchange Commission of Pakistan (SECP) recently granted approval for the introduction of deliverable sugar futures contracts. PMEX views this as a pivotal advancement towards fostering greater transparency and efficiency within Pakistan’s sugar trading sector.

Currently, the exchange is actively onboarding potential buyers and sellers, given the presence of approximately 80 sugar mills nationwide. Prospective buyers encompass a wide range of entities, including confectionery and soft drink manufacturers in the corporate domain.

Rehman emphasized that this initiative signifies PMEX’s inaugural foray into deliverable futures contracts within the realm of agricultural products.

Previously, in 2023, PMEX facilitated trading in rice and maize, incorporating an option for physical delivery of the grains.

According to Rehman, these trading and delivery options were provided in collaboration with Electronic Warehouse Receipts (EWR) operators operating in Pakistan, such as Naymat Collateral Company Management.

A statement released by PMEX highlighted sugar’s significance within the agriculture sector.

The statement further noted that the sugar industry has encountered enduring issues such as unregulated pricing, excessive speculation, hoarding practices, and inefficiencies in the supply chain. With the introduction of Deliverable Sugar Futures at PMEX, the industry will gain access to a regulated, national platform that promotes transparent price discovery, streamlined trading processes, effective risk mitigation, and improved market documentation.

PMEX conducted promotional roadshows in key sugar trading centers like Sargodha and Lahore, bringing together sugar millers, brokers, traders, dealers, and major sugar buyers.

These sessions provided participants with comprehensive insights into the new contract specifications, live trading demonstrations, an overview of the account opening process, and training on conducting mock trades on PMEX prior to the contract’s launch, as per the statement.

PMEX CEO Khurram Zafar remarked on the existing lack of structure and transparency in sugar trading, despite its prominence as one of the country’s most actively traded commodities.

Zafar stated that Sugar Futures represent a turning point for PMEX, ushering in an era of transparency, price stability, and equitable trade practices.