Maharashtra sugar traders to resume lifting of mill stocks

Traders had cited price crash for withdrawing from the market.

The sale of sugar in Maharashtra has been at a standstill for a week, due to a withdrawal by traders. However, a meeting today between representatives of sugar factories and traders ended in hopes that the matter had been resolved, at least for now.

Traders who had purchased the sugar in the second week of February at Rs 3,700 aquintal, the then price, were refusing to lift these with the crash in prices to Rs 2,700-2,800 a quintal. As a result, new tenders were not going forward.

The weekly free sale quota for Maharashtra announced by the Government of India was 0.4 million tonnes, of which 25 per cent (0.1 mt) had to be sold within the first week of this month.

It had not, causing serious concern for millers. Maharashtra millers expect a produce of 5.7 mt against the original projection of 4.8 mt by the end of the current crushing season and had already announced a higher cane price. They feared if the stalemate continued, they would find themselves in a serious financial crisis.

The Federation of Cooperative Sugar Factories in Maharashtra, a representative body of over 170 co-op mills, held meetings today with the Maharashtra State Sugar Merchants and Brokers Association.

Chandrashekhar Ghule, the Federation chairman, told Business Standard: “The meeting discussed the issue and both parties have arrived at a consensus. Based on this, fresh tenders for a sale of 0.1 mt sugar will be issued on Tuesday and the traders have agreed to participate in it. Millers will come out with a benchmark price, below which no mill will sell their sugar. Traders have agreed for such a proposal and decided to participate in the fresh tender.”

Sugar industry sources said the cane price paid in Maharashtra by the cooperative mills is the highest among all states, in the range of Rs 2,200 to Rs 2,500 a tonne.

Co-ops being owned and managed by farmers themselves, the commitment on cane price has to be adhered to, for which improvement in the base sugar price is needed.

A representative of the sugar traders body, who did not want to be quoted, said it had been impossible for traders to honour earlier commitments in view of the sudden crash in domestic sugar prices, coinciding with a slide in international prices, which had slid to $560 a tonne from $745 a tonne.