Sugar prices have jumped by about 10% over past five days after the central government kept the amount of sweetener sugar mills can sell in open market in July lower than normal monthly limits and industry expectations.
According to traders, price of S-30 grade sugar in Mumbai has increased to Rs 32 per kg on Tuesday from Rs 29/kg on June 28. “Lower quota has created a shortage-like situation, lifting the prices upward,” said Ashok Jain, president at Bombay Sugar Merchants' Association.
The government has lowered sugar sales quota to 16.5 lakh tonnes in July, against 21.5 lakh tonnes in June.
Jain said the industry was expecting a quota of 19-20 lakh tonnes. Rise in prices has also slowed sugar exports as millers are now more interested in selling in domestic market, instead of bearing losses in exports.