Indian sugar mills association

Heavy Selling by UP Mills cuts sugar prices

Date:	16 Dec 2011

Source:	The Economic Times

Reporter:	ET Bureau

News ID:	769

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PUNE: Heavy selling by the UP sugar mills in order to make cane payments within the stipulated period of 14-days has led to a plunge in sugar prices, both in spot and futures market in last two days.

The UP government has started filing FIRs against those mills who do not make cane payment within the stipulated period of 14 days. As a result, the mills are selling heavily, bringing down the prices.

Shyamlal Gupta, secretary of the Uttar Pradesh Sugar Mills Association, said: "There is a pressure on the UP mills to sell sugar as they have to make cane payments quickly. The sugar mills in UP are in worst financial position. With 8.2% sugar recovery, the production cost is about Rs 36 a kg while the mills are selling the sugar at Rs 29 a kg."

There was a downward trend in sugar prices for the last ten days. In Maharashtra, ex-mill sugar prices have declined by Rs 250/quintal while in UP, the decline was Rs 150/quintal during the same period. The mills were holding on to stocks in the hope of improvement in prices.

Now, they feel pressure to sell the quota requirement. "We were selling very less in the first half of December in the hope that the prices may improve. Today, we have not been able to sell even half of the current month`s quota. So, naturally, there is a pressure to sell the quota requirement," said the chairman of a Maharashtra-based sugar co-operative. Sugar production in Maharashtra is likely to miss the government estimate of 9.3 million tonne.

"The supply situation is very comfortable. We have good carry-forward stocks, and now supplies are rising from new season crushing, but demand is weak," said Badruddin Khan, associate vice-president (research) at Angel Commodities Broking.

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