With the festive season in full swing, sugar prices are looking depressed and have declined by Rs 50-70 per quintal in the last couple of weeks.
With the festive season in full swing, sugar prices are looking depressed and have declined by Rs 50-70 per quintal in the last couple of weeks. According to traders, demand has not picked up despite the season. “The restrictions imposed by the government in terms of stock limits on sugar millers in addition to higher production estimates for the crushing season which is likely to commence in a month mean ample supplies and therefore there is no hurry for purchases,” said Mukesh Kuvedia, secretary general, Bombay Sugar Merchants Association. Sugar prices are currently at Rs 3,680-3,754 per quintal for small grade and Rs 3,780-3,900 for medium grade. Usually, maximum buying happens from September 15 to October 15 but this time sales are not as per expectations, he said. Traders are buying in limited quantities because of stock limit pressures and they know that the government will not let prices increase, Kuvedia said. With the season likely to commence in November, more production is expected in a month, which means there is no pressure to keep stocks in the fear of prices going high, he explained.
Sugar mills in Maharashtra will begin crushing operations in November. The Indian Sugar Mills Association and the central government have projected sugar production of about 250 lakh tonnes in 2017-18, higher than the estimated 203 lakh tonnes in 2016-17. With the rise in cane production, CARE Ratings expects sugar production for the upcoming sugar season (October 2017-September 2018) to reach 250 lakh tonnes. This implies a year-on-year growth of 23.8%. The rise in sugar production in 2017-18 will be after two consecutive years of decline. The closing stock for the year 2017-18 thus will be more or less in line with that of 2016-17 and
The rise in sugar production in 2017-18 will be after two consecutive years of decline. The closing stock for the year 2017-18 thus will be more or less in line with that of 2016-17 and assuming that no sugar is imported or exported during the 2017-18 season. The stock, however, will not be sufficient to meet the three-month requirements for the next season. This will aid the prices to remain stable during the 2017-18 the agency reported.
There are several factors that have resulted in the price decline. Usually buying for the festive season is completed well in advance and therefore one cannot expect sales to happen in the next couple of days, said Prakash Naiknavare, managing director, National Federation of Cooperative Sugar Factories (NFCSF), an apex organisation representing 264 cooperative sugar mills & 9 state federations of cooperative sugar factories.
The stock limits imposed by the government on millers and traders has put pressure on prices. As a clubbed effect, sales are not happening and if it has taken place, few railway rakes are available for transportation and thus deliveries are not happening, he pointed out. The issue was raised by the industry at the SGM of the federation which was held in Delhi where it was pointed out that if millers start short selling, ex-mill realisations could be affected and in turn the financial health of the industry could get impacted, he said.