Sugar price hits the highest in Mumbai on lower release

According to trade sources, a handful of traders stored a large quantity of sugar during lean season

The price of the M30 variety of sugar (medium size, which is the benchmark) at a centre near Mumbai went up 9.2 per cent over early January on Tuesday to reach Rs 41.54 a kg, the highest so far, due to a lower release by stockists.
 
Seven years ago, sugar was traded at around Rs 40 per kg.
 
In Maharashtra the ex-mill price (the price when the commodity leaves the factory) of this variety of sugar is Rs 37.50-38 a kg. Over the past one year, its price jumped 26 per cent.
 
The situation is almost similar in all major sugar-producing centres in India. The data compiled by the leading agri exchange, the National Commodity & Derivatives Exchange of India (NCDEX), show that in Kolhapur the price increased to Rs 39.67 a kg, going up more than 26 per cent over the past one year.
 

In Kolkata and Muzaffarnagar (Uttar Pradesh), sugar in the wholesale market is selling at Rs 41.50 a kg (5.33 per cent rise over early January) and Rs 39.83 a kg (4.73 per cent rise over early January), respectively. In Kolkata the increase over the past year has been 26.45 per cent and in Muzaffarnagar 25.46 per cent.
 
“Our all-India average cost of production stands this year at Rs 37.50 a kg. Hence, the industry needs Rs 1-2 a kg extra to generate profits for clearing debts and pay farmers. The industry faced a depressed sentiment last year and hence the sugar price cannot be compared to what was there then. The government of India has not given any number to keep the sugar price below that (Rs 37.50) as the government also knows that ISMA does not have any wherewithal to keep sugar prices under control. But the government does tell us that the price should not increase so rapidly,” said Abinash Verma, director-general, Indian Sugar Mills Association (ISMA).
 
The Union Ministry of Food and the Maharashtra government have told industry to arrest sharp price increase.
 
According to sources, sugar is coming in small quantities to the market at higher prices. Half a million tonne of sugar is said to be in the pipeline with large traders.
 
“In a meeting with mills and some stakeholders of the industry last week, the sugar commissioner of Maharashtra virtually directed them not to raise prices artificially. But, there is no need for imports because India has an adequate quantity of sugar. The government, however, should direct mills to release adequate quantities. We believe that sugar prices will not rise anymore,” said Yogesh Pande, founder president, Maharashtra Sugar Brokers & Merchant Association.
 
Sugar prices in the western and southern Indian states remain high due to low production this year. The sugar output in Maharashtra is estimated to decline 38 per cent at 5.2 million tonnes this year as against 8.4 million tonnes last year, because of lower cane availability.
 
Also, ISMA estimates India’s sugar output to decline to 21.3 million tonnes this year as against 25.1 million tonnes last year.