Sugar futures on the NCDEX platform have recovered smartly this week mainly on speculative buying support after the government announced sops for sugar sector.
Sugar futures prices (M-30 grade) on NCDEX surged up by Rs 21-23 per quintal to quote at Rs 1,309 a quintal for October contracts and Rs 1,257 a quintal for November contracts on continued buying support. The near-month contract witnessed covering of positions amid high volumes and rise in price.
The agriculture minister announced monetary support to the sugar sector in the country to tide over the mounting cane arrears and low realisation due to lower sugar prices. There has also been talk of extending the freight subsidy given to the mills by another year. The minister said that he would announce the details in another eight to 10 days.
The government is contemplating allowing mills to make ethanol directly from sugarcane juice. Currently, ethanol is made from molasses. Diverting cane to produce ethanol could restrict production of sugar in the country and give some relief to mills.
?These measures may keep prices steady in the short term, the medium term outlook still remains weak,? an analyst with Sharekhan said.
However, spot prices in the Navi Mumbai remained steady with limited offtake.