Govt's August sugar quota pulls down prices by up to Rs 150/qtl

The government’s decision to release 1.7 million tonnes (mt) of sugar for open market sale during August has pulled down the realisation of sugar mills by up to Rs 150 a quintal. However, retail prices have not softened.

Against an ex-mill price of Rs 2,640 in Maharashtra on July 29, when the announcement came, mills are now realising a price of Rs 2,490 a quintal. Similarly, mills in Uttar Pradesh are now realising Rs 2,795 a quintal, against a price of Rs 2,890 on July 29, when the government announced the stock release for August. Retail sugar price, however, continued to be stable in the range of Rs 32-33 a kg in Delhi.

While the open market quota of 1.7 mt is similar to last year’s August quota, last year the government had to carry forward 300,000 tonnes of the August quota into September. Another 100,000 tonnes of last year’s July quota was carried intoAugust. While the government released 1.7 mt, assuming that festive demand will push consumption up during the month, the industry is of the view that the festivals of Raksha Bandhan, Janmashtami and Ramzan were celebrated in August last year as well. Still, 1.7 mt cannot be consumed and the government had to carry forward unsold quota.

According to industry body the Indian Sugar Mills Association (Isma), the high monthly quota for August adversely impacted the ex-mill sugar prices. Since July 27, on the buzz that a quota of 1.7 mt is being allocated for August, the ex-mill sugar prices all over the country have fallen by Rs 150-200 a quintal. However, retail prices in all the important centres have remained exactly the same.