Sugar prices drop on higher free-sale quota

Sugar prices have slumped on the back of the announcement by the government for releasing as much as 2 lakh tonne extra free-sale sugar for the month of March.

Sugar prices fell by a whopping Rs 800 per tonne following the central government's announcement. The total free sale sugar quota has now reached 12 lakh tonne for March.

Seen as a pre-election sweetener for the masses, retail prices of sugar are seen coming down by at least Rs 1-2 per kilogram.

In fact, between February 15 and now, the price of sugar has crashed by Rs 1500 per tonne. Retail prices, which are hovering at Rs 16-16.50 per kilo at present, are expected to come down to Rs 15-15.50 per kilo.

"This bonanza has caught us unawares. Sugar manufacturers and traders will be severely hit," said a trade watcher. He dubbed the announcement as "sweet poison" for the industry.

However, mills that had been laden with excessive stocks due to the lower release of quota in the previous few months will benefit from the move.

They will be able to get rid of sugar stock that had been non-remunerative.

The ex-Vashi Naka prices of the S-30 variety, depending on the quality, was Rs 1430 to Rs 1450 per quintal today. A month ago, the price of this variety ruled at Rs 1480-1500.

Similarly, the ex-Vashi Naka prices of the M-30 variety, depending on the quality, was Rs 1470 to Rs 1490 per quintal today. A month ago, the price of this variety ruled at Rs 1520-1540.