Retail sugar prices in Delhi moving closer to Rs 50/kg

Retail sugar price in Delhi is inching closer to the Rs 50-per kg mark with rates moving up by nearly Rs 1 everyday since January 1.

The sweetener became costlier by Rs 1 to Rs 45 a kg on January 7 from Rs 44 per kg the previous day, according to the government data.

Sugar prices have more than doubled from the Rs 21 level from beginning of the last year, mainly due to lower production.

Since the beginning of the year, sugar has become dearer by over 15% or Rs 6 per kg.

In the wholesale market of New Delhi , sugar was trading at Rs 44.5 per kg on Thursday and therefore, the retail prices are expected to firm up further.

Rising sugar prices are hurting not only the common man but also sweetmeat makers, ice-cream manufacturers, beverage producers and confectioneries. Bulk users make up for 60% of the total sugar demand.

While the industry attributes the recent spurt in sugar prices to firm global rates which have made imports costlier, traders are blaming it to “low” release of sugar by the government in the open market for January quota.

Restriction put by the Uttar Pradesh government on imported raw sugar in view of protest from cane farmers during October-November last year, is also fuelling the price rise.

Traders said around 1.5 million tonne of raw sugar is locked in the Indian ports because of UP government?s decision to ban the processing of imported raw sugar in the state.

?This has further aggravated the supply shortage as most big mills who have the capacity to process imported raw sugar into whites are not able to do so,? a miller from the state said.

He said that new import contracts are not being entered into as processors are not confident about the processing.

In 2008-09 (October-September), sugar production slumped to 14.7 million tonne from 26.4 million tonne in the previous season. The annual requirement of India , the world’s largest consumer, is 23 mt.

Encouraged by strong demand from India, the world?s largest consumer of the sweetener, refined sugar prices for March delivery rose to $729 per tonne on the Liffe exchange this week, a level last seen in 1989, similarly raw sugar for the same month delivery jumped to 28.90 cents a pound, its highest level since 1981.

Meanwhile, the central government has gone into a war footing to explore ways to process imported raw sugar that is lying at ports due to a ban imposed by the Uttar Pradesh government.

Nearly 0.8-10 million tonne of raw sugar is lying at ports following the restriction imposed by the UP government on transportation and processing of imported raw sugar in early November in view of farmers’ agitation, an official said. A high level meeting was convened by the food ministry with sugar mills’ representatives to consider steps for increasing sugar availability in the market to curb prices.

?We are looking at what could be done to process the raw sugar lying at various ports,” the official said, adding that the government may relax import conditions so that processing can take place in some other states.

The Centre may again write to the UP government to lift the restrictions soon, the official said. ?We could have got 2-3 lakh tonne of processed raw sugar every month, had UP not barred processing of imported sugar,? the official added.

India produced around 5.5 million tonne of sugar in the first three months of 2009-10 crop marketing season that started in October, down almost 8.3% from the same period last year.

Sugar output in Uttar Pradesh, the country?s second-largest producer, in the first three months of 2009-10 crushing season, is estimated to be around 1.7 mt, down from 1.8 mt produced during the same period last year.