Sugar prices remain subdued due to lack of demand and oversupply

By: |
March 10, 2021 3:55 AM

On Tuesday, prices of M-grade sugar in Navi Mumbai quoted between Rs 3,100 and Rs 3,140 per quintal, while S-grade sugar continued to sell below MSP ranging between Rs 3,040 and Rs 3,060 per quintal.

Naiknavare said that the trade is expecting this to happen again due to an increase in cases.Naiknavare said that the trade is expecting this to happen again due to an increase in cases.

Wholesale sugar prices remained subdued despite rising international prices due to oversupply in the domestic market. Traders have adopted a cautious approach, thanks to a rise in Covid cases in parts of the country and lockdowns in some states. Even as demand is yet to kick in for the summer season, consumers are playing safe and institutional sales too have been tepid.

On Tuesday, prices of M-grade sugar in Navi Mumbai quoted between Rs 3,100 and Rs 3,140 per quintal, while S-grade sugar continued to sell below MSP ranging between Rs 3,040 and Rs 3,060 per quintal.

According to Mukesh Kuvediya, secretary general, Bombay Sugar Merchants Association (BSMA), sugar is not being lifted by traders due to the sluggish market conditions due to Covid. Summer demand usually begins in March onwards but this time the demand is yet to pick up and the restrictions caused by the rise in Covid cases has kept consumers away from soft drinks and beverages, he said. The quota has also been on the higher side at 21 lakh tonne, he pointed out.

SY20-21 had started with an opening inventory of 106 lakh tonne. With 302 lakh tonne to be produced in SY2020-21, sugar availability in India will be at 408 lakh tonne. With consumption of nearly 260 lakh tonne and exports quota at 60 lakh tonne sugar surplus will stand at 80-90 lakh tonne. This is significantly higher than the normal inventory of three months that ideally should be carried forward, traders said.

Sanjay Khatal, MD, Maharashtra State Cooperative Sugar Factories Federation (MSCSFF), said, undercutting of prices is happening between mills due to ample stocks. “The congestion in the market is because there is no movement of sugar. The anticipated summer demand has not happened yet and the lack of containers has also impacted exports which are not happening at the desired pace,” he said. “The sugar prices are expected to remain largely range-bound. Domestic prices are unlikely to increase unless sugar MSP is hiked by the government,” said a CARE Ratings report.

Prakash Naiknavare, MD, National Federation of Cooperative Sugar Factories (NFCSF), said, “The lockdown had begun in March last year and the Covid cases are also on the rise this time which is why traders are adopting a wait-and-watch policy. Usually, the summer demand kicks in March but last year Covid struck and impacted industrial and institutional sales. Trade of around one million tonne was hit due to this.”

Naiknavare said that the trade is expecting this to happen again due to an increase in cases. Lockdowns have begun in Yavatmal, Buldhana, Nashik, Aurangabad in Maharashtra and sugar is not selling above MSP in Punjab, Haryana, Uttar Pradesh and Karnataka,” he said. The only ray of hope is in the increase in exports with deals signed for 39 lakh tonne and 17.5 lakh tonne leaving from ports. This is a good sign and could improve market sentiment,” Naiknavare said.

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