Sugar prices are unlikely to rise due to peak production season and will remain under pressure. However, if the Government provides some incentives for export of raw sugar, the domestic scenario could change.
With ample stocks with mill and in markets, prices in domestic markets will be under check with possibilities of slight decline that will put more burden on producers, said traders.
Rohit Shah, President of Bombay Sugar Merchants Association, told Business Line that except exports, there is no way to sustain the market as supply is more than sufficient in the domestic market. With an opening stock of 85 lakh tonnes and production of 245-250 lakh tonnes, total availability will be around 330-335 lakh tonnes. Assuming that 230 lakh tonnes would be consumed by the domestic market, more than four months’ stock is seen as excess. This could lead to further crash in price.
As world prices of $450/tonne for white – refined sugar is not favourable for shipments, the only way out is to encourage raw sugar exports. Domestic producers are already running factories at losses and in the absence of sufficient outflow, they will be forced to sell in domestic markets at a lower price.”
At the Vashi wholesale market, S-grade prices increased by Rs 8 at lower end, while it declined by Rs 23 a quintal at the higher end. M-grade increased by Rs 14 at the higher end, while it ruled unchanged at lower end.
Naka and mill tender rates ruled steady on lower-than-expected demand. There is sufficient stock (about 110 truckloads) and producers are continuously selling and stockists are keeping away from fresh buying.
Arrivals at Vashi market were 62-63 truckloads (of 100 bags each) while local dispatches were 55-56 loads. On Tuesday, about 19-20 mills sold 58,000-60,000 bags at Rs 2,640-2,740 (Rs 2,640-2,740) for S-grade and Rs 2,720-2,980 (Rs 2,720-2,980) for M-grade.
The Bombay Sugar Merchants Association's spot rates were: S-grade Rs 2,850-2,972 (Rs 2,842-2,995) and M-grade Rs 2,951-3,186 (Rs 2,950-3,172). Naka delivery rates were: S-grade Rs 2,800-80 (Rs 2,800-80) and M-grade Rs 2,900-3,075 (Rs 2,900-3,075).
Uttar Pradesh rates were: Muzzafarnagar Rs 3,180.