By Cogencis Wednesday, Jan 29 By Preeti Bhagat
NEW DELHI – Prices of medium-quality sugar fell in most key wholesale markets today as mills offered discounts to offload the January quota before the end of the month, dealers said.
In Delhi, prices were down by 15 rupees per 100 kg, while in Muzaffarnagar and Mumbai, prices fell 20 rupees and 10 rupees, respectively.
Lower demand from bulk buyers also weighed on prices.
On the crushing front, mills have so far crushed 130.32 mln tn of cane in the ongoing season to produce 13.5 mln tn of sugar at a recovery rate of 10.35%, data from National Federation of Cooperative Sugar Factories showed.
In terms of exports, traders believe it has slowed a little as mills in Uttar Pradesh have exhausted their maximum admissible export quantity and are now waiting for the government to reallocate more quota, which is likely by mid-February.
The government will deduct 20% of the quota of mills that did not commit to export even 25% of their quota by Dec 31. It will divert the sugar to mills that have sought an increase in the quota and fulfilled the export criterion of signing contracts for at least 75% of the quota.
So far, India is likely to have signed contracts for close to 3 mln tn of sugar in the ongoing season and have shipped out 1.2-1.3 mln tn, trade houses said.
Prices were steady in Kolhapur due to lack of fresh cues.
On Intercontinental Exchange Futures US, the most active March contract was at 14.74 cents per pound, up 1.4% from the previous close.
The rise in prices was also because of an increase in crude oil prices and short covering by investors after prices hit a two-week low of 14.05 cents a pound on Tuesday. When crude oil prices rise, mills in Brazil prefer producing ethanol over sugar.
“Things have been looking up for sugar traders since the resource began its vigorous rally last September… It could use some help in the form of increased allocations of supply to ethanol production right now,” website Seekingalpha.com said in a report.
Following are today’s ex-mill prices of medium-grade sugar in rupees per 100 kg, at key wholesale markets, and the change from the previous close: