The overall sentiment in the sugar market across the country has improved with prices rising by Rs 400-500 per quintal ahead of the festive season. Traders are attributing this rise in prices to the increasing demand for Indian sugar in the global market, ongoing deals for raw sugar being contracted for the next season and fewer restrictions leading to increasing demand for the commodity in the domestic market.
On Friday, the prices of small grade sugar were in the range of Rs 3,450 to Rs 3,530 per quintal, while medium-grade sugar prices were between Rs 3,580 and Rs 3,750 per quintal. The Centre has fixed Rs 3,100 per quintal as the minimum floor price for sugar.
Mukesh Kuvediya, secretary-general, Bombay Sugar Merchants Association traders were expecting a higher sales quota for August because of the festive season. The government had announced a quota of 22 lakh tonne for July and reduced it to 21 lakh tonne in August. With the international prices going up, rates in the domestic market are also increasing, Kuvediya explained.
“Internationally, the prices touched $500 per tonne for refined sugar and 20 cents/pound for raw sugar. Moreover, the government is also easing restrictions and that is opening up a pent-up demand in the market. The upcoming festivals season has also led to a rise in consumption,” Kuvediya said.
Traditionally, the maximum sugar consumption is seen in August, September and October every year, traders said. Some traders said that a stand-off between the transporters and millers in the Kolhapur and Sangli regions of Maharashtra, overloading charges has resulted in trucks being stopped from coming to Mumbai and this could also be one of the reasons for the price hike.
Sanjay Khatal, managing director of Maharashtra State Cooperative Sugar Factories Federation (MSCSFF) said that the shortage of sugar in the global market and a decline in Brazil’s sugar production led to the spike in prices.
Khatal said the crude oil prices have also gone up resulting in higher sugar prices. Indian millers have realised that it will be more beneficial to go in for raw sugar production at the start of the season to cater to the global market requirements and therefore availability of fresh stock of white sugar could dip. This again will push up prices. Again, ethanol production capacities are expected to double with Maharashtra slated to increase its production capacities from 14 crore litres in 2020-21 to 28-30 crore litres in the coming year, he said.
“Welcoming the advisory issued by the government that encouraged sugar mills to go in for more export. The market sentiment has improved due to the government push,” said Prakash Naiknavare, MD, National Federation of Cooperative Sugar Factories (NFCSF). “The Indian traders have for the first time signed contracts a few months ahead of shipments to export about 725,000 tonnes of raw sugar and 75,000 tonnes of white sugar. Also, traders were ready to absorb a higher sales quota of at least 23 lakh tonne this month because of the festive season and a small quota of 21 lakh tonne has pushed up prices,” said Naiknavare.
The above news was originally posted on www.financialexpress.com
