NEW DELHI – Prices of medium-grade sugar rose by 10 rupees a kg for the second consecutive day in Mumbai today because of improved demand for the good-quality stock, traders said.

 

Prices, however, fell in Muzaffarnagar, Uttar Pradesh and Kolhapur in Maharashtra because of weak demand and higher availability of the sweetener.

 

Sugar prices fell by 20 rupees a kg in Kolhapur and by 10 rupees per kg in Muzaffarnagar.

 

According to Indian Sugar Mills Association, cane arrears have touched a record high of $4.38 bln and it blamed the huge stocks of unsold sugar with mills.

 

"Summer is at its pace but demand from ice-cream manufacturers and soft drink makers is not coming in and there is no buying interest in people. The marriage season has started but still demand is not picking up," said Naresh Gupta, a Delhi-based trader.

 

Demand is not growing due to the government's minimum selling price of 31 rupees per kg. Buyers want sugar below this price but if mills sell below 31 rupees, they may attract legal action under the Essential Commodities Act, 1955.

 

Higher cost of production of 34 rupees a kg has affected the financial health of sugar mills in the country. This, in turn, has led to liquidity crunch and mills don't have enough cash to even pay to their workers.

 

Meanwhile, prices were steady in Delhi because of demand-supply parity.

 

On ICE Futures US, the most-active July contract of raw sugar was down 0.6% at 12.79 cents per pound. The contract had hit a one-week low of 12.69 cents a pound earlier today.

 

Estimate of sugar production in Thailand, world's fourth largest producer, rose by 1 mln tn to 14.6 mln tn in 2018-19, Sucden Financial said in its report quoting a respected analyst. This also led to lower prices.

 

"Brazilian producers may be less aggressive given that there is less certainty about what they will have available given that ethanol still pays a substantial premium and rainy weather is expected to hamper operations to begin with," Sucden said.

 

Following are today's prices for medium-grade sugar, in rupees per 100 kg, in key wholesale markets, and the change from the previous close:

MARKET	PRICE	CHANGE
Delhi	3,285	0
Mumbai	3,322	10
Muzaffarnagar	3,295	(-)10
Kolhapur	3,318	(-)20