Sugar prices slump on extra quota release

Sugar prices declined five per cent last fortnight due to release of 1.5 lakh tonne by the government and huge stocks ready to deliver on futures.

The S 30 spot price closed at Rs 1,820 per quintal as against Rs 2,000.50 per quintal on February 7 while M30 eased at Rs 1,880 per quintal as compared to Rs 2,026 per quintal.

For naka delivery, the S30 variety of sugar was sold in the range of Rs 1,815-30 while M30 was quoted between Rs 1765-80 per quintal.

Mill delivery sugar was sold between Rs 1,770-85 (S30) per quintal and Rs 1,805-25 (M30) per quintal.

"The current oversupply is a temporary phenomenon and the industry would get over it before the first week of March and the price would start looking upwards," said Mohan Gurnani, president, Bombay Sugar Merchant Association.

"Another reason for price ease is the mills' selling future quota on spot. In fact, sugar mills have started selling next month's quota at lower price fearing further decline," said Rajendra Shah of Hitendra Kumar Takarshi & Co.

Further price movement depends upon the government's decision on quota. If the government decides to extend the quota lifting then price would certainly decline by further Rs 25 per quintal, said Rajendra Shah.

M variety sugar futures for March contract on the National Commodity & Derivatives Exchange Ltd (NCDEX) slumped seven per cent to Rs 1,994 per quintal on Tuesday as compared to Rs 2,134 per quintal on February 7.

March sugar contract on the Multi Commodity Exchange of India (MCX) closed at Rs 2,032 per quintal as against Rs 2,115 per quintal on February 9.