The Maharashtra State Cooperative Bank (MSCB) has increased valuations for sugar yet again. This time, valuations have been raised by R210 per tonne to R2,975 per tonne, Pramod Karnad, MD, MSCB, told FE.

Last month, valuations were raised to around R2,765 per tonne. However, mills have not been able to sell stocks in large scale due to lack of demand.

Valuations have been raised for the third consecutive month by the apex cooperative bank of Maharashtra. This is the highest valuation rate for the 2015-16 season so far.

Valuations have been raised since prices are now hovering between R3,500 per tonne and R3600 per tonne. As per the new valuations, the pledge rate now comes up to R2,530 per tonne. The cane payment last month was around R1,600 per tonne. The bank, however, as per directions of the state government has been giving an additional 5% margin money to borrowers for the season. As per the 90% formula, the cane payment comes up to R1,920 per tonne, an increase of R148 per tonne. This leaves a good amount with sugar mills to make cane payments to farmers.

Industry observers, however, pointed out that there has not been much movement in stocks despite a rise in rates. As per market speculation, sugar prices are likely to go up to R4,000 per tonne. But international sugar prices have fallen to $435 per tonne from $ 465 per tonne which has also impacted export.

According to Sanjeev Babar, MD, Maharashtra State Cooperative Sugar Factories Federation, although the mills have been willing to sell their stocks, large scale buying has not been happening. It is a traders market and at present, there is very little demand, he pointed out, adding that mills have been able to sell just about 3,000-5,000 bags, which is a very small amount. Babar dismissed speculation that sugar prices could cross the R4,000 per tonne-mark, saying that prices may hover around R3,700 to R3,800 per tonne and may again drop since mills in Brazil will start production soon.