Sugar prices down; mills want stock limits to be lifted

Early arrival of new season production has pushed sugar prices down, say mill owners.

A note from Indian Sugar Mills Association (Isma) said sales in the festival months of September and October were around 4.1 million tonnes, compared to about 4.2 mt in the same two months last year.

The M-30 variety is now selling here at Rs 3,772 a quintal, down 3.4 per cent from July's Rs 3,905 a qtl. Isma says the ex-mill price in Maharashtra is estimated at Rs 34-35 a kg and in Uttar Pradesh at Rs 352-36 a kg, against the all-India average cost of production of Rs 37.5 a kg. This, it complains, is putting pressure on mills' realisation.

The Association estimates sugar production this season (it began on October 1, nearly 25 per cent higher than the one before, at 25.11 mt. Hence, it says, it has asked the government to withdraw the stock holding limit on traders with immediate effect. Else, it says, cash flow will be affected, affecting mills' capacity to pay cane farmers."

The 2017-18 season's opening stock is estimated at 3.9 mt. Cane crushing began earlier than the usual in previous seasons. As on last Wednesday, 313 mills had begun operations as compared to 222 which had at this time a year before. Around 1.37 mt of sugar had been produced in the first 45 days of the season, as compared to 0.77 mt in the first 45 days of last year.

The main contributors to the higher production are mills in UP and Maharashtra. The former had produced 567,000 tonnes of sugar as on Wednesday, against 193,000 tonnes last year. In Maharashtra, against last year's 192,000 tonnes, this year has already seen 326,000 tonnes. The third largest producer, Karnataka, has produced almost the same as last year.