Sugar prices on the Vashi wholesale market dropped sharply on Wednesday as mills sold aggressively to raise cash. Spot prices for the small grade sugar fell by Rs 25-42 a quintal and medium grade declined by Rs 10-30.

Routine demand and resales keep naka rates unchanged, but mills sold Rs 10-20 cheap on lower than expected offtake.

Weak physical demand pulled down prices in the futures market by Rs 20-25 . The temperature has fallen below normal in many parts of the country and demand for sugar from bulk consumers such as ice-cream and cold-drink makers usually drops at this point of time. On the other hand, retail demand also eased.

In the absence of Government’s financial support for raw sugar exports and with world market continuing to be bearish, domestic producers have started selling desperately in local markets. Being a large producer of sugar, Maharashtra faces stiff competition from other producing States. Arrivals at the Vashi market were 60-61 truckloads (each 100 bags), while local dispatches were 58-60 loads. On Tuesday, about 14-15 mills sold 38,000-40,000 bags at Rs 2,620-2,710 (Rs 2,630-2,730) for S-grade and Rs 2,730-2,900 (Rs 2,730-2,920) for M-grade.

The Bombay Sugar Merchants Association’s spot rates were (Rs/quintal): S-grade Rs 2,800-2,950 (Rs 2,842-2,975) and M-grade Rs 2,941-3,092 (Rs 2,950-3,122). Naka delivery rates were: S-grade Rs 2,760-2,865 (Rs 2,760-2,865) and M-grade Rs 2,810-3,055 (Rs 2,810-3,055).

Uttar Pradesh rates were: Muzzafarnagar Rs 3,170.