New Delhi: The commodity market regulator, the Forward Markets Commission (FMC), has asked the country’s top two commodity exchanges to more than double their initial margin to 10% for sugar and wheat futures, starting from Monday, aimed at curbing price volatility.

Initial margin is the minimum percentage of money traders are mandated to deposit with the exchange for trading in commodity futures. Currently, Multi-Commodity Exchange is charging 8.9% of initial margin on wheat and 5% on sugar, while National Commodity and Derivatives Exchange (NCDEX) is levying 4.78% and 4.41%, respectively. The increase in initial margin is aimed at discouraging speculators in the trading of the two commodities.

Wheat prices have risen by around 30% since June 20 on NCDEX and sugar has gained 27% since the first week of June on the exchange. Wheat for September delivery was ruling at R1,445 per quintal intraday, while sugar was at R3,645 per quintal. Analysts said fears that poor monsoon may hurt cane yield has driven up prices of sugar. Similarly, low level of ground water reserve level and persisting deficit in monsoon rains have led to concern that winter crop such as wheat would also be affected, pushing up its prices.

Sugar production is expected to be 25 million tonne in the marketing year starting October, down from an estimated 26 million tonne in 2011-12. The country has harvested a record 93.90 million tonne of wheat in the crop year through June. The FMC has said it is keeping a close vigil on futures trading of farm commodities, in view of deficient monsoon