Sugar prices may drop further

Sugar prices are expected to decline by another Rs 20-25 a quintal this week in continuation with last week's slump of Rs 70 a quintal due to thin demand.

After the most recent decline, S30 sugar for mill delivery is currently quoting at Rs 1,775-1,785 a quintal, while the same variety for naka delivery is selling at Rs 1,830-1,850 a quintal. M30 sugar for mill delivery is selling at Rs 1,805-1,835 a quintal and the same for naka delivery is at present available at Rs 1,890-1,910 a quintal.

Stockists were forced to take out their inventories to the market for sale following Sharad Pawar's statement that the government would not allow sugar prices to go further up.

Usually there is a consumption boom in May as summer heat leads to increased liquid intake, but despite that demand is currently very low "� not only in India but abroad as well.

"The exports potential for Pakistan and Bangladesh will have no impact on general market trends, as common traders are not allowed to send their consignment abroad," Ashok Jain, secretary, Bombay Sugar Merchants' Association said.

Only raw sugar importers are allowed to export white sugar to these countries in restricted quantity. The total sugar production in India is estimated to touch 195 lakh tonne this year "� about 20 lakh tonne more than the output anticipated in the beginning of the year.

"Hoardings were collecting sugar a fortnight ago and, therefore, prices were picking up in anticipation that chances are that they may touch Rs 25 a kg. But, they not only stopped buying but started offloading immediately when mills started releasing more sugar to markets," Rajendra Shah, a prominent sugar trader in the city, said.

May is the only highly demanding month after November, but the real demand has come to an end as rainy season is setting in very shortly.

At the current prices, now demand is coming from only the eastern markets, Kolkata and Assam in particular. Hence, outlook for sugar looks grim at least for the next few weeks, Shah said.

In the futures market, the June contract sugar prices declined by Rs 100 in the last one week to Rs 1,890 a quintal.