Sugar prices rise on fresh demand

Sugar prices started picking up once again in the domestic markets on Saturday "" especially in Uttar Pradesh where the commodity had been seeing a slump last week owing to the Union government' release of an extra quota of 50,000 tonne.

The excess quota had eased the physical prices of M30 sugar by over Rs 50 a quintal till Friday. But on Saturday the market took a cue from Maharashtra and prices surged by Rs 20-30 a quintal. This rise took the price of M30 sugar to the level of Rs 1,820-1,850 a quintal.

In the spot market, sugar prices are ranging between Rs 1,950 and Rs 1,960 a quintal.

The present rise in sugar prices is mainly attributed to non-availability of good-quality sugar in the market and firming up of sugar prices in the Kolkata market, in a similar range of Rs 1,930 to Rs 1,935 a quintal.

Earlier, during the lean period of one week, exchanges too were quoting lower, and traders were shocked at the unexpected slump of sugar prices because it was in a demand season.

"Speculative trading was the only factor controlling sugar prices. Almost all sugar mills have started delivering new sugar, thereby, raising stocks level and pressuring prices," Anil Kapoor of Satyadeo Omprakash, a Muzaffarnagar-based sugar trading house, said.

But Uttar Pradesh is facing a severe sugarcane supply crunch, which is expected to normalise latest by January 25. Only then prices of sugar would stabilise, said Kapoor.

India has been exporting sugar to Pakistan, Bangladesh and Sri Lanka, and other markets, too, are opening up with good sugar demand potential. Sources said Tamil Nadu has received a sizeable exports order from Pakistan, which, if correct, would boost sugar prices immediately.

If prices dip below Rs 1,700 a quintal in Tamil Nadu and below Rs 1,650 in Kolkata, exports potential would be more. If prices move below Rs 1,750, they may go up by Rs 80-90 to maintain the current level and become stable, Kapoor said.

Maharashtra witnessed a different scenario altogether. Sugar prices remained firm throughout the last week and S30 for mill delivery closed in the range of Rs 1,790-1,810 a quintal, while ready naka delivery ended between Rs 1,840 and Rs 1,860 a quintal.

Again, while M30 for mill delivery settled in the range of Rs 1,840-1,870 a tonne, ready naka delivery closed at the Rs 1,900-1,920 (medium quality) a quintal level and the Rs 1,900-1,940 (best quality) range. In the Vashi spot market, S30 and M30 sugar prices are ranging between Rs 1,890 and Rs 1,900 a quintal and Rs 1,925 and Rs 1,970 a quintal, respectively.

The present price rise is mainly attributed to rising demand ahead of marriage season and surging sugar futures prices on exchanges.