Sugar prices decline as stockist demand wanes

Sugar prices declined across all varieties by Rs 20 throughout the country on Wednesday. The prices fell by Rs 10 in the retail market with the S30 being quoted in the Rs 1,796-1,840 per quintal range and M30 at Rs 1,876-1,925. The reason cited for the drop is the end of festival demand from stockists.

Sugar for mill delivery was sold at Rs 1,780-1,810 for S30 and at Rs 1,820-1,870 for M30 today. However, compared with month-ago figures, the prices are up by about Rs 50.

"About 20 days ago, prices of sugar for mill delivery were hovering at around the Rs 1,667 per quintal level, which later shot up to Rs 1,740 per quintal on the back of rising demand from Madhya Pradesh and Gujarat. Since then prices have been rangebound with small ups and downs for the next 15 days till recently, when volumes started falling as customers began staying away from the market. This resulted in a fall in prices," said Ashok Jain, secretary, Sugar Merchants Association.

"Supply during this month, unlike in September, is normal as sugar mills are running smoothly according to allotted quota to Mumbai. This month we expect the supply to meet the allotted quota of 14 lakh tonne to Mumbai and thereby, no upward price revision is expected in the near future," said Rajendra Shah, a Mumbai-based trader.

Shah said the mill delivery S30 sugar price is in the range of Rs 1,715-1,735 per quintal while M30 is at Rs 1,770-1,810 range per quintal. Free sale S30 sugar is priced in the range of Rs 1,765-1,790 per quintal and M30 is quoted at Rs 1,850-1,890.

"Sugar prices jumped more than expected due to stock building by traders and the absence of customers led to the fall. The prices have not yet settled. There is still room for further reduction in prices," Rajendra added.

"Total sugar production is seen at around 180 lakh tonne, which equals our demand. The crop has been excellent to produce enough sugar this year. Even if sugarcane prices are quoted at Rs 1,100 per quintal with total conversion charges the final sugar output would be costing around Rs 1,350 - Rs 1,400 per quintal. Currently, M30 is in the range of Rs 1,750 - Rs 1,800 per quintal which is expected to come down to Rs 1,650 per quintal in the next 3-4 months, he hoped.

In Muzaffarnagar, M30 of normal quality is quoted at Rs 1,890 per quintal while ex-mill delivery is sold in the range of Rs 1,740 - 1,755 per quintal.

Premium quality is ranging between Rs 1,780 - Rs 1,800 per quintal while new sugar of M30 is moving in the range of Rs 1,820 - Rs 1,830 per quintal. "For the dealers, festive demand which is generally higher than normal by about 15-20 per cent, is already over and we do not see much customers' turnout," said Anil Kapur of Satyadeo Omprakash, a Muzaffarnagar-based trader.

"The prices have declined by about Rs 50 in the last 10 days because of strong supply and low offtake. Some mills have already started cane crushing and others are in various stages of finishing.

The trend is going to continue for the next 10-15 days," Anil said, adding, "The mills in Uttar Pradesh are working according to quota system but the supplies glut or tightness depends upon how mills are handling the scenario," Anil said.