Indian sugar mills association

Sugar Prices Back Due To Lack

Date:	27 Jun 2011

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News ID:	591

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PUNE: Sugar prices, which rose by Rs 1/kg before the announcement of the second tranche of sugar export quota on Thursday, fell back later because there was no clarity on the limit of stocks traders hold. The stock-holding limit on traders had been relaxed to 500 tonne/month in March from 200 tonnes/month. As there were reports of a further relaxation inthis limit, prices had moved up. "The market was upbeat over the reports that a decision on lifting the stock limit will also be considered during the meeting to discuss sugar exports. Following this, sugar prices increased by Rs 100/quintal. But as the Centre announced the decision to export 5 lakh tonne sugar without any reference to the stock limit, prices fell by Rs 10/quintal to Rs 20/quintal on Saturday," said Ashok Jain, president, Sugar Merchants’ Association of Mumbai . Wholesale prices in the Vashi market rose from Rs 26/kg (S-grade) and Rs 27/kg (M-grade) to Rs 27/kg and Rs 28/kg respectively on Thursday. The sugar industry, which is holding 60% of the stock produced in the current sugar year, is watching the response of export decision on domestic prices. "The decision to export five lakh tonne sugar is welcome. But we are more concerned about the immediate improvement in domestic prices," said the managing director of a leading sugar co-operative. The ex-mill tender rates before the export quota announcement in Kolhapur, which are considered benchmark rates for futures trading, were varying from Rs 23.80/kg to Rs 24/kg. After the announcement, the rates increased up to Rs 24.75/kg. But once it was confirmed that the stock limit on traders had not been lifted, the ex-mill rates came down by Rs 20/quintal to Rs 30/quintal, settling at around Rs 24.25/kg to Rs 24.50/kg. Sugar prices were heading downward since the third week of June as mills started selling the June quota, putting pressure on the supply side. "Now, whether the improvement in the domestic sugar prices continues or not will depend upon the announcement of the July quota and whether the mills get permission to carry forward the June quota," said Jain. Burdened with overflowing godowns and selling below the production cost, the sugar sector has called for more measures from the central government. Maharashtra co-operatives minister Harshvardhan Patil said, "We have decided to take a delegation to the prime minister to demand an export of 25 lakh tonne sugar, an imposition of 50% import duty on sugar and the creation of a buffer stock of 50 lakh tonne." The creation of a buffer stock will help mills to shift excess quantity of sugar out of their stock. It also helps the mills as the Centre will pay for the insurance of the buffer stock and its godown rentals. For Commodities news updates, follow ET on Twitter Gold to stay bullish over lo... NEXT STORY Down again on risk flight; Brent falls 7 per cent on week Commodity prices fell for a second straight session on Friday, rounding up a woeful week for crude oil. There are no comments on this article yet. Why don’t you post one? Comments are moderated and will be allowed if they are about the topic and not abusive. Your comment Characters remaining (1500) To post this comment you must log in. Log In/Connect with: Log In with FacebookLog In with Twitter More Login Options or Fill in your details: Will be displayedWill not be displayed Will be displayed Share this Comment: Post to Facebook Post to Twitter Please answer this simple math question. 5 + 1 =

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