Increased supply for summer by the government and imposition of stocks limit for traders announced last months have failed to curb spot prices of sugar in the physical market over the past four days.
Improved summer season demand coupled with lower crop estimates kept sugar prices firm at the major terminal markets including Delhi, Muzaffar Nagar, Mumbai and Kolhapur, traders said.
Sugar prices of medium grade in Delhi, Muzaffar Nagar and Kolhapur have increased by Rs 160-165, or 7.5%, to trade at Rs 2,345, Rs 2,335 and Rs 2,170 per quintal, respectively.
On the futures trading platform, NCDEX April contracts (Kolhapur delivery) also rose by 4% to trade at Rs 2,171 on Monday over last week.
?Trading interest has shifted from April to May contracts,? a trader said.
Spot prices in Mumbai also gained significantly and crossed Rs 2,300 per quintal on continued buying from bulk consumers.
?Overall monthly supply of nearly 19 lakh tonne for the current month is enough to cater the domestic demand, Mukesh Kuvadia, secretary, Bombay Sugar Merchants’ Association (BSMA) said.
Overall fundamentals remain supportive for the prices with lower output forecast in India and a global deficit of more than 43 lakh tonne, up from a previous projection of 36 lakh tonne, sources said.
?Sugar imports, both raw and white even at zero-duty, have become unviable in the present scenario as international prices are ruling high. Thus, despite government’s effort to ease import norms, we don’t expect imports to take place in the coming weeks,? an analyst with Angel Broking said.
From the medium term perspective, fundamentals for sugar remain strong due to lower production estimates for India as well as rising deficit in global markets. Global sugar demand is expected to outstrip supply and build a larger deficit in 2009-10, she said.
Sugar production would touch 150 lakh tonne for season 2008-09, according to SL Jain, director general, ISMA.
?Prices closed above its five days SMA, 20 days SMA and 65 days SMA indicating an up trend. RSI is at 70.01 and is currently moving in the overbought region,? technical analyst said.