Spot sugar prices on the Vashi wholesale market shot up Rs 30-40 a quintal on Tuesday, tracking a Rs 10-20 increase in mill tender rates. Lower output projections for 2012-13 on deficient monsoon also boosted prices.

Naka rates went up by Rs 30 a quintal on higher beginning-of-the-month local demand. The sentiment was firm, said traders.

Mr Jagdish Rawal of B. Bhogilal & Co. said: “Higher retail demand at the beginning of the month and slower pace of selling by mills on expectations of higher demand and price in coming days brightened the sentiment. Deficient rain across the country and concerns over production and yield also fuelled the bull run.”

There have been reports of some fresh buying in Maharashtra from Gujarat, Rajasthan and Madhya Pradesh.

If purchases from the East (which is generally done in the form of rail rakes) also join that is lacking in Maharashtra, then prices may rise sharply.

The Government has declared 45 lakh tonnes of free sale quarterly quota for July- September. Sugar demand is usually higher during festivals such as Ramadan, Raksha Bandhan, Janmashtami, Ganeshotsav and Navaratri – Durga Puja, etc.

At the Vashi market, arrivals were higher at 50-52 truckloads and local dispatches were 50-51 loads. On Monday, 27-28 mills sold about 1.00-1.25 lakh bags (each of 100 kg) at higher price of Rs 2,920-2,980 (Rs 2,900-2,950) for S-grade and Rs 3,010-3,070 (Rs 3,000-3,050) for M-grade.

The Bombay Sugar Merchants Association's spot rates (Rs/quintal): S-grade Rs 3,022-3,081 (Rs 2,991-3,041) and M-grade Rs 3,100- 3,241 (Rs 3,066- 3,211).

Naka delivery rates: S-grade Rs 2,985 -3,030 (Rs 2,960 -3,000) and M-grade Rs 3,085-3,170 (Rs 3,060-3,130).