Sugar market shift: Sugar prices plummet amidst increased production and selling pressure

Sugar prices have softened by Rs.200 per quintal in key domestic markets after remaining stable for the previous 4-5 sessions. In the last week of October, Ex.Mill Kolhapur region S/30 Grade sugar was trading at Rs.3720 per quintal. The prices have now fallen to Rs. 3,520 to 3550 per quintal.

Moving up north, Muzaffarnagar M/30 Grade sugar was trading at Rs.4050 per quintal in the last week of October. The prices have fallen by almost Rs.200 to Rs.250 per quintal to Rs.3800 per quintal now.

Market watchers opine that the reason for weakening sugar prices is mainly attributed to the fresh production of sugar by mills, which is adding to the supplies, thereby easing prices. Sugar crushing has picked up in the country. Sugar mills have produced 11.2 MMT of sugar as of 31st December 2024. Demand is seen as stable at this point.

What do the producers of sugar have to say about the fall in prices? Mr. D.K. Sharma – Director, Avadh Sugar and Energy Limited, Birla Group said that sugar mills are currently facing selling pressure, leading to a decline in sugar prices. “Southern sugar mills in Karnataka and Maharashtra are operating below their capacity. Due to the pressure of clearing cane payments, there has been a significant sale of rakes from these states, but the delivery of sugar is experiencing notable delays. Moreover, due to the high flexible movement of sugar prices during December 2023, buyers were cautious and buying sugar on demand only during January 2024”, he said.

Sharma also said that after the government imposed restrictions on ethanol production from sugarcane juice/syrup, sugar production is estimated to be higher, which could have led to a dip in sugar prices.

Rahil Shaikh, MD, MEIR Commodities India Pvt. Ltd, said that the Government announced restrictions on ethanol production from B Heavy molasses and sugarcane juice/syrup and then capped total sugar diversion to 1.7 million tons. Since then there has been a rising trend of increase in sugar production. “Industry associations have revised their sugar production estimates. As the fresh estimate suggests, the total sugar output in the season will be at 32 million tons in the country. If sugar consumption is expected to be at 28.5 million tons, then the expected sugar closing stock would be higher than earlier expected by almost 3 million tons. I think this is the reason why sugar prices in the domestic market have dropped by Rs.200 per quintal. It will be a supply-driven market and there will be higher availability of sugar than the actual demand. I feel the sugar prices should stabilise at these levels,” Mr. Shaikh added.


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