Sugar up 2.5% on supply crunch

Sugar prices have surged by nearly 2.5 per cent of Rs 50 per quintal in the last two days owing to supply shortage from mills.

Currently, S30 variety for mill delivery is quoted in the range of Rs 1750-Rs 1760 per quintal while M30 variety sugar is sold in the range of Rs 1790-Rs 1830 per quintal.

For naka delivery, S30 is quoted in the range of Rs 1860-Rs 1870 per quintal and M30 variety is sold for Rs 1910-Rs 1930 per quintal.

Rajendra Shah of Hitendra Kumar Tokarshi & Co said about 4-5 rake of sugar ( 2,200 tonne) flowed out of the states resulting in temporary supply shortage. He said, sugar was directly sold from the mills as traders wanted the prices to touch Rs 25 per kg.

Centre has issued a quota of 42 lakh tonne for Maharashtra for the current quarter spread into April, May and June at 14.5, 14.5 and 13 lakh tonne respectively. Ashok Jain, secretary, Bombay Sugar Merchants' Association, said this is more than the required quantity. Centre had released 34 lakh tonne sugar for the same quarter last year.

India is expected to produce about 175 lakh tonne of sugar this season. With a carry forward stocks of 45 lakh tonne, the total availability of sugar this season could be around 22 million tonne.

An estimated 50,000 tonne would be exported to Pakistan and Bangladesh have also opened up for raw sugar exports.

Surprisingly, June contracts on the National Commodities & Derivatives Exchange is quoted Rs 200 higher than the nearby month in anticipation that the price would rise after the election at least by Rs 300-400 per quintal. M grade sugar for June contract is quoted presently at Rs 2089 per quintal while July contract closed on April 3 at Rs 2132 per quintal.

Despite the offtake period extended by several mills, the mill owners are not releasing sugar in expected quantity which means sugar traders have to sell at the current price with nil stocks for the rise in prices. This is not good for traders, said Shah.

Meanwhile, Sri Lanka is understood to have bought 2500 tonnes of sugar from an undisclosed Indian company at $475 per tonne. On the other hand, Pakistan is reported to have floated another tender for 50,000 tonne import from India.

Consequently, the sugar price would no wonder touch Rs 25 per kg, a trader said. Vietnam aims to import 3,00,000 tonne of sugar by October 2006. Bangladesh is also planning to import 200,000 tonne. China has also evinced interest to import raw sugar from India due to a massive decline of about 2.5 lakh tonne output from Australia owing to cyclones.