Sugar Prices Jump Rs 50-80 On Buffer Stock Speculation


Sugar prices rose by Rs 50-80 per quintal on Monday on market speculation that the government may create a buffer stock of about 30 lakh tonne of the sweetener and fix a minimum price for the sale of the commodity by the mill owners to traders in addition to probably bringing the release mechanism back.

According to Mukesh Kuvediya, secretary general, Bombay Sugar Merchants Association, sugar prices have gone up on these market rumours of the possible creation of a buffer stock and fixing of a minimum price for sale of the commodity. Ex-mill sugar prices on Monday were Rs 2,600-2,650 per quintal for S-30 grade and `2,660-2,750 per quintal for M-30 grade.

Since exports are not viable for millers at present because of the non parity in international and domestic prices, additional measures were required to rein the downslide in sugar prices, he said.

If these measures are taken, prices have to improve further, he said. At present, the demand in the market is slack with excess sugar production. Though the government had mandated mills to export 20 lakh tonne, there is still an excess of 50 lakh tonne, according to industry observers.

The slight improvement in prices still does not bring much cheer to Maharashtra mills. This season, Maharashtra has seen a record production of 107.05 lakh tonne of sugar after crushing some 952.21 lakh tonne of cane at a recovery rate of 11.24%, said Sambhaji Kadu Patil, Sugar Commissioner of Maharashtra, adding that last season the production this year beat last year’s record of over 105.14 lakh tonne of sugar.

Of the 187 mills that crushed cane this season, barely 3 mills are still functioning and the season may come to an end in a couple of weeks, he said. Excess sugar continues to be a major problem for the state, he said, adding that a meeting is slated with cooperation minister Subhash Deshmukh in a couple of days.
Chief minister Devendra Fadnavis will soon meet Prime Minister Narendra Modi and request him to address the issue of excess sugar in the state, cooperation minister Subhash Deshmukh said last week.

Hit by falling prices and lack of demand, sugar mills in Maharashtra are now seeking a transport subsidy of Rs 250 per quintal from the government in addition to concessional rates for warehousing.

According to the Sugar Commissioner, the cane arrear position has marginally improved, coming down to `1,913.18 crore from Rs 2,210.63 crore on April 30. While 70% of the mills have paid 100% of their dues, the rest have been able to make part payments, he said, adding that around `200 crore in cane payments have come from millers in the last 10 days.

Although notices have been issued to the remaining mills, the Commissionerate is remaining cautious and is not taking any strong steps against millers on market speculation that the government may declare some relief measures for the sector.

Chief minister Devendra Fadnavis is slated to meet Prime Minister Narendra Modi next week to discuss the issue and request him to grant permission to export sugar. Patil said that the next season could also prove to be a bumper one with around 10.5 lakh hectares likely to come under cane. This season, the area under sugarcane was nearly 9 lakh hectares.

SOURCEFinancial Express


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