1. Sugar trade expected to normalise in December

Sugar trade expected to normalise in December

There has been a slight pick-up in sugar trade, which was affected due to the demonetisation drive, in the last three to four days in Maharashtra. Industry experts expect near normalcy in trade by the next week.

By: | Pune | Published: December 2, 2016 6:07 AM
“Post demonetisation, demand was very poor because of currency shortage in the market and prices fell by R10-30 per quintal. Trade was also impacted to the tune of 30%. However, things have started picking up,” Mukesh Kuvediya, said secretary general, Bombay Sugar Merchants Association.  (Reuters) “Post demonetisation, demand was very poor because of currency shortage in the market and prices fell by R10-30 per quintal. Trade was also impacted to the tune of 30%. However, things have started picking up,” Mukesh Kuvediya, said secretary general, Bombay Sugar Merchants Association. (Reuters)

There has been a slight pick-up in sugar trade, which was affected due to the demonetisation drive, in the last three to four days in Maharashtra. Industry experts expect near normalcy in trade by the next week.

“Post demonetisation, demand was very poor because of currency shortage in the market and prices fell by R10-30 per quintal. Trade was also impacted to the tune of 30%. However, things have started picking up,” Mukesh Kuvediya, said secretary general, Bombay Sugar Merchants Association.

On Thursday, S-30 variety was sold at R3,502-3,690 per quintal while M-30 prices ranged between R3,680-3,852 per quintal. Kuvediya said that price correction will happen and trade will also come back to normal by next week. On an average, usually between the first 10 days of the start of the month, some 600 to 700 tonne of sugar is traded on a daily basis and by the 15th to 25th of every month, trade drops to 400-500 tonne a day, he said.

Trade had dropped by nearly 30% in this period and it remains to be seen up to what extent the pick-up in trade happens, he pointed out. Sugar millers in Maharashtra had also complained about lack in demand from traders in November.

After remaining stable at R36,000 a tonne in September, sugar prices touched a five-year high of R36,200 a tonne in October. Post-demonetisation, it fell marginally to R35,500 a tonne in November.

Domestic sugar prices have remained firm, having increased from about R31,500 a tonne in March to R36,000 a tonne in August and have maintained the firm trend ever since on the back of lower sugar production estimate this year.

The expected decline in the sugar production during the 2016-17 sugar season (October-September), actual decline in the domestic sugar stocks during the 2015-16 season and a global sugar deficit scenario has kept prices up.

Kuvediya said the outlook for the commodity this season would largely depend on the crushing, the total amount of production and market demand.

According to government estimates, sugar production in India is estimated to decline by 10.27% to 225.2 lakh tonne in the ongoing season. The Centre in a series of measures in the last six months has imposed a 20% tax on sugar exports, withdrawn the excise duty concession on production of ethanol, imposed stock holding limits on sugar mills in addition to wholesalers and retailers as it felt that some mills along with few unscrupulous traders could further push up the prices. The state will begin the season with an opening stock of 32.7 lakh tonne.

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