Sugar spot prices on the Vashi wholesale market have touched Rs 2,000-mark on Thursday on continued buying interest from upcountry traders and reduced supplies from mills on the back of lower free sale quota released by government.
Spot prices of sugar medium grade have increased to trade at Rs 1,950-2,010 per quintal on increasing local demand ahead of festival season and lower free sale quota released by government while small grade prices were quoted at Rs 1,900-1,950 a quintal on Thursday on continued buying from upcountry traders, a local dealer said.
The government released the August free sale quota at 9 lakh tonnes, lower from 12 lakh tonnes released for July 2008.
?Local prices have jumped by nearly Rs 300 a quintal over the past three days because fresh demand is higher from local as well as upcountry traders whereas overall supplies from mills are limited, a local trader said.
Local spot prices at Delhi market also shot up by Rs 40 to trade at Rs 1,920 a quintal on Wednesday. Boosted by the less than expected sugar quota for the current month, sugar futures prices were also surged by Rs 100-110 a quintal over the past 2-3 days.
?I think local prices may remain firm over the next few days due to demand-supply mismatch. If the government considers release of additional quota for the current month, prices may show some downward trend,? he said.
Estimates of lower production coupled with lower free sale supplies in the coming months may further support sugar prices in the short term, an analyst with Angel Commodities said.
Sugar cane planting in the country has been lower at 43.2 lakh hectares, compared with 52.8 lakh hectares a year ago.