After witnessing an unabated rally within a quick period of a month, spot prices of sugar have now started moving downwards. Sugar prices had surged by Rs. 400 per quintal during 5 July to 15 August on the back of lower quota and higher future prices. However, the prices in local markets of Gujarat have dipped by around Rs. 90 to Rs. 115 per quintal in last couple of days.
Lower quota and firm futures had pushed the sugar prices by around Rs. 400 per quintal. In Ahmedabad spot market, prices of sugar M-30 and S-30 touched a peak of Rs. 1950 to Rs. 1980 per quintal and Rs. 1920 to Rs. 1940 per quintal respectively, said Jagdish Thakkar, owner of a local broking firm Jagdish Broker.
After staging rally for one month, sugar prices have now started easing. Spot prices of both S-30 and M-30 have declined by Rs 100 to Rs. 115 per quintal to settle at Rs. 1835 to Rs. 1855 and Rs. 1880 to Rs. 1890 per quintal respectively, he added.
Similarly millgate prices sugar in Gujarat have also come down to Rs. 1790 to Rs. 1,810 per quintal for S-30 and Rs. 1825 and Rs.1840 per quintal for M-30. "In Maharashtra M-30 sugar prices have declined to Rs. 1800 to Rs. 1830 per quintal from Rs. 1,880 and Rs. 1,900 per quintal month ago," Thakkar said.
Industry players attribute release of adequate quota and absence of buying interest to the recent fall in sugar prices in local markets.
The Centre had released 11 lakh tonne sugar quota in August and September will further see 12 lakh tonnes of quota release, including 3 lakh tonne additional quota. This has eased the supply situation in the markets, which in turn has resulted into a fall in sugar prices, traders in Ahmedabad said.
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Marketmen opined that the demand in the market is also low, which has helped to cool down the prices. "At present, futures are trading lower as against the spot market prices, which indicates no scope for further rally in the market," Thakkar said.
Recently, Bombay Sugar Merchants Association, has requested the Forward Markets Commission (FMC) to ban futures trading in sugar.
The association has argued that speculative activity on commexes has led to a surge of Rs 400 per quintal.