Sugar spot and futures prices in the domestic market may rule lower in the next few days as supplies by sugar mills have increased considerably amid sluggish demand.
Sugar small grade (S-30) at Vashi APMC was quoted lower at Rs 1,375-1,425 per quintal while sugar medium grade (M-30) was ruling around Rs 1,390-1,435 per quintal mainly on reduced off-take by local retailers and restricted buying from upcountry traders.
“Sugar supplies in the domestic market have improved while local demand is dull. Free sale quotas announced for the current month and next month are fair enough to cater the domestic demand,” Mukesh Kuvadia, joint secretary, Bombay Sugar Merchants’ Association (BSMA), told FE.
Sugar-medium March 2008 contract (Kolhapur) on MCX platform has fallen by Rs 4 to trade around Rs 1,343 per quintal on Wednesday on some selling pressure. Sugar-medium March 2008 contract (Kolhapur) was down by Rs 27 to trade around Rs 1417 per quintal over past ten days on lack of fresh buying support.
“I think futures and spot prices will remain subdue in the next few days as retail physical demand is low and supplies have increased. On the other hand, fresh buying for export is also limited as international prices have gone up by nearly $50 a tonne in last few days,” Kuvadia said. According to rough estimate, the country exported about 10 lakh tonne by January-end.
The government increased free sale quota to 16 lakh tonne (including additional one lakh tonne) for March 2008 for domestic consumption as against 14 lakh tonne for the current month, sources said. In the current scenario, the upside in the futures market is limited as spot price will remain under pressure due to increased supplies.