Sugar prices in various local markets of Gujarat have turned volatile ahead of government agencies start duty-free import of white sugar as allowed by the union government. The prices of sugar in Ahmedabad firmed up by around Rs. 30 to Rs. 40 per quintal on Saturday.
After two years of oversupply, India's sugar production is estimated to decline in 2008-09. This has led to a sharp rally in sugar prices.
"Over the past 15 days, prices of sugar have jumped up by nearly Rs. 300 per 20 kg. In Ahmedabad, spot prices of M-30 sugar have galloped from Rs. 2,380 to Rs. 2,400 per quintal, while S-30 price have surged to touch Rs. 2,350 to Rs. 2,380 per quintal", said Jagdish Thakkar, a city-based leading sugar trader.
The mill delivery prices of M-30 and S-30 have also increased sharply to touch Rs. 2,370 to Rs. 2,390 per quintal and Rs. 2,340 to Rs. 2,360 per quintal respectively, which shows a rise of Rs. 150 to Rs. 200 in last two weeks.
Industry players are of the view that good demand coupled with projections of lower sugar output have driven the prices upward. "The demand of sugar has increased due to summer", Thakkar added. However, the major factor responsible for price rise in decline in sugar production this year.
"Sugar production in the entire country is likely to fall by around 25 to 30 per cent in 2008-09", said Mansinh Patel, president, Federation of Gujarat State Co-operative Sugar Factories (FGSCSF). The fall in production could be guaged from the fact that all the sugar factories have finished crushing activities one month before the crushing season
Last year sugar production in the country stood in the range of 270 lakh to 264 lakh tonnes, which, according to market estimates, is expected to come down to 160 to 164 lakh tonnes this year.