Lower output estimates push up sugar prices

In the wake of expectation of lower sugar production this year, prices of sugar in the local markets of Gujarat have witnessed a sharp rally. The prices of both S-30 (small sugar quality) and M-30 (medium sugar quality) sugar have surged in the range of Rs 100 to Rs150 per quintal within a short span of three weeks.

The prices of M-30 have increased to touch a level of Rs 1,975 to Rs 2,025 per quintal from Rs 1,850 to Rs 1,875 three weeks back. Similarly, S-30 prices have moved up to Rs 1,920 to Rs 1,970 per quintal from Rs 1,800 to Rs 1,825 within the same period, sugar traders said. Marketmen are of the view that the forecast of lower sugar production in 2008-09 has resulted into sharp surge in prices in the local markets.

The price trend in other states is more or less the same. "Last year, total sugar production in the country stood at Rs 280 lakh tonnes, which is expected to decline substantially this year," said Prashant Shah, a leading sugar trader based in Ahmedabad. The total sugar production in the country is pegged at 210 lakh tonnes in 2008-09, while the domestic consumption is estimated to be 220-230 lakh tonnes.

Many sugarcane farmers have shifted to other cash crops following lower realisation last year. This has resulted in 17 per cent dip in sugarcane acreage in 2009.