Sugar remains steady on hike in import duty

August contract gains 1%, as speculators build fresh positions

Sugar prices spurted by nearly 1 per cent to Rs 3,174 per quintal in futures trade today as participants indulged in creating speculative positions after the government raised import duty besides additional interest-free loan of Rs 4,400 crore for sugar mills.

At the National Commodity and Derivatives Exchange, sugar for delivery in August spurted by Rs 31, or 0.99 per cent, to Rs 3,174 per quintal with an open interest of 24,940 lots.

The July contract also traded higher by Rs 24, or 0.77 per cent, to Rs 3,129 per quintal in 32,660 lots.

Analysts said fresh positions created by speculators supported by the government's decision to raise import duty on sugar and rising demand from bulk consumers in the spot market, mainly influenced sugar prices in futures trade.

The government yesterday decided to hike the import duty on sugar to 40 per cent from 15 per cent and provide an additional interest-free loan of up to Rs 4,400 crore to sugar mills to enable the cash-starved industry pay their huge arrears to sugarcane farmers.

Besides, export subsidy will be extended till September this year to give relief to the sugar industry, which owes Rs 11,000 crore to cane growers largely from Uttar Pradesh.