The prices of sugar fell in the key wholesale markets of the country on Thursday amid increased selling pressure on mills, dealers said.
Prices of medium-grade sugar were down by ₹5 per 100 kg in the markets of Delhi and Muzaffarnagar, and ₹10 per 100 kg lower in Mumbai and Kolhapur.
“Millers are quoting lower prices as there is no demand at current price levels despite it being the festival season,” Mukesh Kuwadia, a dealer in Mumbai, said.
Mills also have to adhere to stock limits, traders said.
The government has imposed stock holding limits on sugar mills for September and October to keep prices in check ahead of major festivals. Sugar mills can hold up to 21 per cent of the total sugar supply of the 201617(October-September) season as of the end of September, and 8 per cent of the supply as of the end of October.
Demand for the sweetener has been low since the beginning of the month.
“There is only hand-tomouth demand as crushing season is nearing and there is fear of government action in case prices rise,” Ashish Kapoor, a trader in Muzaffarnagar, said on Wednesday.
Some sugar mills in western Uttar Pradesh are likely to begin cane crushing for 201718 (October-September) on October 10, said Sanjay Bhoosreddy, principal secretary at the Sugarcane Development and Sugar Industry.
Typically, mills start crushing cane in the first week of November or after Diwali. Sugar mills in Maharashtra have, however, decided to start cane crushing operations for the 2017-18 (October-September) season from November 1, putting to rest speculation about an early start to crushing operations. The government may allow more sugar imports if required, Food Minister Ram Vilas Paswan said earlier last week. Sugar stocks in southern States may fall to critically low levels in the run-up to Diwali, he said. To boost domestic supply and keep prices in check, the government had, earlier this month, allowed mills to import 300,000 tonnes raw sugar at a 25 per cent concessional duty under tariff rate quota for 60 days.
Outlook
Global prices of raw sugar are estimated to fall 24 per cent on year to 13 cents a pound (1 pound = 0.45 kg) in 2017-18 (October-September) due to higher supplies, the Australian Bureau of Agricultural and Resource Economics and Sciences said in a report.
Global sugar production is expected to increase 7 per cent on year to a record 190 million tonnes, slightly higher than the forecast in June, it said.