Sugar enters volatile zone

Sugar prices could witness extreme volatility, rising or falling in next two weeks, owing to uncertainty over the level at which the government would close the quota for July.

The Centre has not yet released the monthly sugar quota data, triggering confusion among traders and agents. This led to a fall in trades in end-June.

"When the supply figure is known, the factories can sell the stock accordingly. The confusion has led to need-based selling, and speculation," said Himanshu J Shah, chief executive officer, Esugarindia Ltd.

The government announced on June 25 that the quarterly quota for sugar from July to September was 38 lakh tonne, with a levy quota of 2.16 lakh tonnes to be released per month in same period, fixing total availability at 44.48 lakh tonne. It, however, did not offer any break-up for the three months.

Further, the government stated the June sugar quota would be extended upto July 15.

"This scenario has put traders off gear, as there are a few people who would have already sold their June stock, while others who did not could benefit," Shah said.

The average ruling price in Mumbai is Rs 1571 per quintal for the S30 grade, and Rs 1610/q for the M-30 variety, as on July 2.

The price for the S-30 grade peaked (for the month of June) at Rs 1573/q on June 25, before declining to Rs 1566.50/q the subsequent day. The M-30 average prices for the same days were Rs 1610/q and Rs 1605/q respectively.

The release order for the monthly quota was expected on Thursday but the information was withheld.