Indian sugar mills association

Sugar extends losses on lack of demand

Date:	15 Dec 2011

Source:	The Business Line

Reporter:	BL Correspondent

News ID:	767

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Mumbai, Dec. 14: Sugar prices at the Vashi market extended losses on Wednesday further by Rs 20-30 for S-grade and Rs 40-50 for M-grade in the physical market on easing of demand. With volumes at their usual level during the mid-month period, the sentiment remained weak on expectation of more selling by mills in coming days. Naka and mill tender rates also declined on weak demand scenario, said market sources.

Producers sold at reduced prices, in the absence of buying interest from stockists at the mill level, to maintain liquidity. This led to a drop of Rs 30-40 in tender rates, said a wholesaler. Their selling pressure also resulted in a decline of Rs 20-30 in naka rates. Despite a continued drop in the rupee (slipped down towards Rs 54.00 today) against the US dollar, there is no movement on the sugar export front. Other sides pick cane crushing with expected higher production of sugar this year domestic level will add more pressure of heavy stocks on producers.

Analysts say the 19.07 lakh tonnes allotted by the Government for sugar quota for this month is seen by traders as sufficient on lack of demand. More than half of the quota is said to be unsold.

Considering an ample supply, most stockists kept away from inventory buying and covered only the needed quantity as and when required. This makes the sentiment cautious. Neighbouring states` buying has been absent since the start of December.

Sugar prices in domestic market have lost more Rs 150-170 this month and may drop further by Rs 50-60 if local demand does not improve.

At the Vashi market on Tuesday, 20-22 mills offered tenders and sold only about 35,000-40,000 bags in the range of Rs 2,850-2,910 a quintal (Rs 2,880-2950) for S-grade and Rs 2,950-3,040 (Rs 2,985-3,065) for M-grade. Arrivals in Vashi market were 50-52 truckloads and local dispatches were around 47-48 truckloads. Freight rates were unchanged. In international market March-12 futures was up by $2.30 to $608.60 ($606.30) and May-12 futures was $601.00 ($597.90) on Tuesday.

Bombay Sugar Merchants Association`s spot rates: S-grade Rs 3,001-3,081 (Rs 3,021-3,111) and M-grade Rs 3,076- 3,212 (Rs 3,131-3,252).

Naka delivery rates: S-grade Rs 2,960-3,030 (Rs 2,960-3,030) and M grade Rs 3,040-3,140 (Rs 3,070-3,150).

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