Sugar medium-grade prices in the physical as well as the futures markets may remain firm in the next few days on sustained festival demand from bulk as well as small consumers, despite the announcement that the Centre released an increased free-sale quota of 44 lakh tonne for the current quarter (October-December 2008).
Despite the high free-sale sugar quota (FSQ) released by the government, spot and futures prices of sugar in the domestic markets have risen by Rs 30-Rs 50 per quintal on Friday on continued buying from bulk consumers, thanks to sustained festival demand, trade sources said.
Sugar spot prices at the Muzaffarnagar wholesale market have touched Rs 1,900-mark on Friday on continued buying interest, while spot prices of sugar medium-grade at the Vashi APMC market increased by Rs 30-Rs 40 to trade at Rs 1,795-Rs 1,895 per quintal on rising festival demand, a local dealer said.
Sugar m-grade October contracts (ex-Kolhapur) on the NCDEX settled high at Rs 1,777 per quintal on Friday, up by Rs 40 over the past two days. ?Sugar mill-owners are not keen to sell more sugar, as they feel that the increase in domestic demand will continue for some time,? trade sources said. Of the total FSQ of 44 lakh tonne, the government has released 15 lakh tonne each for the month of October and November and 14 lakh tonne for December 2008.
The government has also considered the request of the industry to extend the validity period of the normal quota of September for a period of 15 days and dismantled buffer stocks for a period of 30 days beyond September 30. According to government sources, it released 12 lakh tonne of FSQ for September 2008. In addition, it is expected that 4 lakh tonne-5 lakh tonne of FSQ would be sold by sugar mills out of the dismantled first buffer stock of 20 lakh tonne as well as at least 4.5 lakh tonne FSQ from dismantled second buffer stock of 30 lakh tonne.