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. Last Updated: 07/27/2016

7 Firms to Trade Sugar Futures

The RTS exchange expects up to seven firms to trade when it opens the country's first sugar futures contract Wednesday, as producers hedge risk ahead of a second successive year of record beet sugar output.

Traders in Russia and Western Europe said the introduction of the white sugar contract on the RTS would have more chance of success than previous attempts, due to the increased maturity of the market in the world's largest importer of raw sugar. But questions remain as to the amount of liquidity the contract will be able to attract.

"The success will depend on the ability of the sugar contract to attract independent investors," said Sergei Gudoshnikov, senior economist at the International Sugar Organization.

Russia refined a record 3.3 million tons of sugar from its own beet in 2006 -- more than half its total consumption -- and expects production to hit 3.4 million tons this year as refineries invest in equipment and farmers sow more beet.

The RTS contract will apply to 5-ton lots of white sugar. The price will be in rubles per kilogram and delivery terms will be free on rail, meaning the seller pays to deliver the sugar to any station in one of two southern regions.

"Tomorrow we expect around five to seven participants," said Sergei Danov, head of derivates development at the RTS.

"There has been interest from practically all participants in the Russian sugar market, including the 'Big Five,'" he said, referring to Prodimex Group, Yevroservis, Rusagro-Sakhar, Dominant and Razgulyai. "We hope that about a third of trade will be from those companies with foreign capital."