Sugar spot and futures prices in the domestic market are expected to remain lower over the next few days on higher free sale supplies amid steady but limited buying interest from upcountry traders.
Spot prices for medium grade at the Vashi wholesale market were around Rs 1,822-1,900 per quintal on Wednesday while spot prices in the Kolhapur market were down Rs 100 to trade at Rs 1,731 per quintal as compared to Rs 1,828 in the beginning of the current month.
On the NCDEX platform, sugar medium grade September contracts also declined by Rs 115 to settle at Rs 1,653 per quintal on Wednesday from Rs 1,778 per quintal quoted in the beginning of the current month.
“Prices have fallen from the peak levels recently as the government has decided to increase free sale supplies and compelled sugar mills to release more sugar during the festival season. I think spot prices may remain subdue over the next few days mainly on increased free sale supplies. Demand for sugar may remain steady but limited,” Mukesh Kuvadia, a leading sugar trader said.
Total supplies for the current month are expected to increase to 20 lakh tonnes as the sugar mills are allowed to sell 25% of the stock kept as buffer stock. Earlier, the government has fixed the quota for free sale sugar in the current month at 12 lakh tonne, which is below market expectations.
Sugar mills have been forced to release about 8 lakh tonne from the current buffer stocks by the month-end. The government released the August free sale quota at 9 lakh tonne, lower from 12 lakh tonne released for July 2008.