Mumbai, April 22:

Sugar prices dropped by Rs 10-20 a quintal at the mills level on Monday as the wholesale markets will be closed for three days starting Monday. The market closure is in protest against the imposition of local body tax. In the absence of fresh commitments –buying from traders – selling pressure increased. Spot prices also weakened by the same margin.

As the Vashi market was closed, there were no arrivals. Sources said that the Bombay Sugar Merchants Association has decided to close shutters till Wednesday in protest against the tax. Traders are demanding scrapping of the tax that will require even petty shop owners to register with the authorities. Demand eased in other centres dragging domestic spot and futures by Rs10-14 till noon.

Analyst said that the sugar market is currently passing through a bearish phase on ample supply and need-based demand. As observers expect sufficient closing stock of about 70- 75 lakh tonnes at the end of the season, the effect of lower output projection for the next season will not be seen on market for near future. Progress of monsoon will play a crucial role after June. Mills are under pressure of debt liabilities and payment for farmers dues they will continue selling.

On Saturday evening, 10-12 mills offered tenders and sold 30,000 – 35,000 bags at Rs 2,940-3,020 (Rs 2,940-3,020) for S-grade and Rs 3,040- 3,120 (Rs 3,040 - 3,120) for M-grade said sources.

On National Commodities and Derivatives Exchange sugar May contracts were down by Rs 9 to Rs 2,930 (Rs 2939), June to Rs 2,990 (Rs 3,004) and July to Rs 3,020 (Rs 3,030).