Sugar spot prices in the domestic market may remain firm during the next few days mainly on supply concerns amid good seasonal demand ahead of a series of festivals during the current quarter (July/September 2008).
Spot prices across the major centres have increased by Rs 100-125 a quintal in past fortnight.
“Total quota release by government (including free sale and buffer) is not fair enough to cater the forthcoming festival demand.
There will be good demand from bulk consumers considering a series of festivals in the current quarter. This time festivals are one month before than last year as per Hindu calendar,” a local trader said.
The major festivals during the current quarter are Sharavan month, Raksha Bandhan, Ganesh Chaturthi, Navratri, Durga Pooja and Dashera.
The government has announced a total release (free sale and buffer) of 53.50 lakh tonne of sugar (April-June) during the summer season (April/June) while total release announced (both) for the current quarter (July-September) is calculated at 48 lakh tonnes, leaving a deficit of around 5 lakh tonnes. Considering the good festival demand, the government may release some additional quota in a day or two, sources said.
“I think the government should release at least seven lakh tonne as additional release and buffer quota should be made compulsory for millers to sell in the domestic market (not for export contracts).
Unsold or un-lifted quota by September 30 should be converted into levy for PDS supply to check price rise,” an analyst said. Spot prices for medium grade at the Vashi APMC market were ruling higher by Rs 100-110 at Rs 1,630-1,650 per quintal on Thursday while small grade prices were around Rs 1,600-1,620.