Sugar prices rising on high festival demand

Sugar prices have gone up by Rs 50 per quintal in the last four days because of tightness in supply and inordinate rise in consumption due to Diwali and Ramadan.

Sugar prices have been on an uninterrupted upward movement since October 1. Mill delivery sugar S30 is now quoting at Rs 1,745 per quintal as against Rs 1,680 per quintal on the first of this month. M30 is now selling at Rs 1,825 per tonne as compared to Rs 1,760 per tonne for mill delivery.

Naka delivery for S30 is currently quoting at Rs 1,810 as against Rs 1,755 on October 1, while M30 is selling at Rs 1,885 per quintal "� up from Rs 1,830 in the same period.

"Supply is tight in Mumbai, as we received only 10 lakh bags last month "� one lakh bags less than the allotted quota. This month too, we have been allotted to receive approximately 14 lakh bags. So, we are now facing a supply crunch, which we hope to overcome soon," said Rajendra Shah, a sugar trader in Mumbai.

Sugar mills were forced to start production a bit late this year, as heavy rains resulted in floods in several sugarcane areas. Naturally, sugar supply is bound to be affected, reasoned a trader.

"In Mumbai, it is the coordination among ourselves, which is ensuring supplies, otherwise an acute scarcity could have led to price mounting several times," Shah said.

In Uttar Pradesh, too, the scenario is more or less the same. And sugar prices are going up in Delhi and surrounding areas owing to short supply.

"Even if supply becomes smooth, the rising demand would maintain sugar prices upwards as Diwali is a festival of sweets during which sugar consumption is going to increase manifold," Shah said.

It is time the government intervened, otherwise sugar prices may even perk up to the Rs 1,900 (S30) per quintal level for local supplies, which is currently at around Rs 1,845 per quintal.

Mumbai normally consumes approximately 70 gadi (each containing 1,250 quintals) per day, but in festival season, the demand of the metro alone increases approximately 50 per cent to about 100 gadi.

"In the last few days, the prices did shoot up by Rs 50 per quintal. This is not because of supply shortage but because of festival demand," Ashok Jain, secretary, Sugar Merchants' Association, said.

Mumbai did face supply crunch from allotted quota, but that has been compensated by the excess quota bought by Baramati, he added.

"Sugar prices are expected to jump further by about Rs 50 very soon," Jain said.