Spot sugar slips to 16-month low

Spot sugar prices slipped to a sixteen-month low at Rs 1,766.50 a quintal (S-30) and Rs 1,795 a quintal (M-30) on Friday. Subdued demand on the back of oversupply has pushed the prices down, turning the festive season bitter for sugar traders.

The prices of S-30 for mill delivery were quoting at Rs 1,625 while those for M-30 were trading at Rs 1,650 a quintal. The best quality sugar in the open market traded at Rs 1,700 a quintal. All varieties of sugar are quoting at sixteen-month low.

Prakash Naiknavare, chairman of Maharashtra State Federation of Cooperative Sugar Factories, cited rise in sugar allocation released into the market, non-lifting of sugar stocks by traders and export ban as reasons for the low price.

The government has increased the quota of sugar released in the market to 16 lakh tonne for October as against 14 lakh tonne during the same period last year.

Besides, stocks carried forward from the previous month have added to the glut in the market. Sugar stocks are in large supply as against the anticipated consumption of about 15 lakh tonne.

Despite a large number of traders participating in tenders, hardly any stocks were lifted during the inauspicious period, a fortnight prior to Dussera. The stocks, hence kept piling up, depressing the demand in the market.

The government's ban on exports has further added to the oversupply in the market. Moreover, the consumption is anticipated to be comaparatively less during this Diwali and Id season.

"During Diwali and Id there is a huge demand for sugar, as consumption of sweets rises. However, this festive season has turned sour, owing to low demand from consumers," said Rajendra Shah of Hitendra Kumar Takarshi & Co, a Vashi-based trader.

The government has succeeded in its efforts to suppress sugar prices this festive season by allocating more supplies in the market this month, said Naiknavare.