Sugar prices on Wednesday were at Rs 3,700-3,800 plus 5% GST per quintal for small grade and Rs 3,770-3,940 per quintal plus GST for M-grade in Vashi, one of the biggest markets in Mumbai.
With the festive season approaching, traders are waiting to see if sugar mills are going to lower down prices. Sugar prices on Wednesday were at Rs 3,700-3,800 plus 5% GST per quintal for small grade and Rs 3,770-3,940 per quintal plus GST for M-grade in Vashi, one of the biggest markets in Mumbai. According to top officials of the Bombay Sugar Merchants Association, demand is poor at the moment since the mills are maintaining price. Prices went up by Rs 200 per quintal from Rs 3,350 per quintal after the supply pipeline went dry post the implementation of GST. Demand is likely to pick up from next week onwards, said Mukesh Kuvedia, secretary general, Bombay Sugar Merchants Association. He, however, did feel that with the new crushing season expected to commence from the first week of October, a slight shortage could happen in the market between September and the new season since Maharashtra has little stock in hand as compared to Uttar Pradesh that reported a higher production in the 2016-17 season.
Sugar prices are likely to remain firm over the next three months on increased festival demand and a supply crunch, traders said. Sugar prices have climbed 3% since July 1 despite a lower tax burden on the commodity under the goods and services tax (GST) regime as traders delayed purchases to take benefit of input credit, drying up supply lines. Tax on sugar has come down to 5% from about 8% since July 1 when the GST was rolled out. Kuvedia said that the outlook would depend if the millers reduce price because they have been holding onto them.
Cooperative sugar millers have maintained that they have not held onto stocks and have been despatching sugar in the market. According to a note issued by the National Federation of Cooperative Sugar Mills, cooperative mills are not lagging behind in supply. Prices have stabilised at Rs 3,650 per quintal ex-mill in Maharashtra, Gujarat and Karnataka and Rs 3,700 per quintal in Karnataka, said Prakash Naiknavare, MD of the National Federation of Cooperative Mills.
As on February 1, 2017, the all India stock position was 52 lakh tonne and 68.89 lakh tonne as on July 1, 2017. Around 41.73% of the stock has been despatched in the market since February to June, he said. According to him, data submitted in the emergency meeting called by the Union food secretary revealed that cooperative sugar mills in Haryana ( 51%), Karnataka ( 52%), Gujarat and Maharashtra (40%), Uttar Pradesh (40%) of the stock has been offloaded in the market. The secretary told the meeting that that if the price spurt situation continues, the government will not hesitate in taking stringent steps such as importing white sugar, and imposing stringent stock limits.
According to Naiknavare, because of the slight panic in the market caused due to the dry pipeline during July 2017, this time most of the purchases are being made at least a month in advance of the festival — a trend that has never been seen before. He said that prices have stabilised and are likely to be maintained around the same levels. Sugar prices remained steady at the wholesale market in the Delhi market on Wednesday because of scattered buying amid restricted arrivals.
Marketmen said small buying support in view of approaching month-end and restricted supplies by mills, mainly hold sweetener prices at overnight levels.