Sugar price up on easier issue rules

Sugar prices have risen by Rs 150 per quintal across the country as a sequel to the government’s restoration of the earlier monthly release quota mechanism.

Sugar mills were allowed to release sugar into the market monthly till February, when the government insisted they do so weekly, with the aim of checking a rise in prices.

In April, this was relaxed to a fortnightly release.

In Vashi mandi, near here, the M-30 variety in the spot market was traded this afternoon at Rs 3,000 a quintal with mill and naka delivery being quoted at Rs 2,850 a quintal and Rs 2,950 a quintal, respectively. S-30 was quoted Rs 50 lower. In New Delhi, however, ready medium and second grades rose to between Rs 3,125-3,250 and Rs 3,125-3,240 per quintal, respectively.

The mill delivery medium and second grades also traded higher, between Rs 2,925-3,125 and Rs 2,900-3,100 per quintal, respectively.

The imposition of the weekly and fortnightly mechanisms had created problems for mills. They were also penalised for failure to follow the sale mechanism by conversion of unsold sugar into levy sugar, which sells at Rs 1,300-1,400 a quintal compared to the market price of around Rs 2,700 a quintal.

The change has provided much-needed relief to the sugar industry.

The current change in the release mechanism would provide hedgers an opportunity to sell when prices would rise, said G S C Rao, executive director of Simbhaoli Sugar Mills Ltd. “Mills, in turn, will get a fortnight for hoarding.”

If the government wants mills to clear farmers’ arrears this year to sow cane in the maximum area possible next year, then it will have to frame industry-friendly policies to keep sugar prices in a remunerative range between Rs 3,200-3,500 per quintal, Rao said.

Also, white sugar import has to be stopped to avoid a supply glut in next season. Currently, 2,50,000 tonnes of raw sugar is lying at various South Indian ports, which should be cleared soon, Rao demanded. Until the quota release is increased significantly on higher output estimates this year, prices will continue to move, said Rajendra Shah, Partner, Hitendra Kumar Thakarshi & Co, a Vashi-based trader.

The government announced a quota of 2.11 million tonnes of sugar for sale during the month of May, including a levy quota of 2,17,000 tonnes.

Vivek Saraogi, president of the Indian Sugar Mills Association and managing director of Balrampur Chini Mills estimated in a conference call that India’s total sugar output would be 18.5 million tonnes in the 2009-10 season.

For the next season, he forecast output at 23-24 mt, on higher plantation.