Sugar may turn bearish

COMMODITY SPIKES

Sugar prices are likely to decline to Rs 1,200 a quintal next week, if the Centre fails to raise the buffer stock limit to 50 lakh tonnes from the current 20 lakh tonnes.

"Even if the government raises the buffer stock limit, it would take at least a month to have an impact at the ground level," said Rajendra Shah, a Vashi-based trader.

The sweetener remained volatile last week, with prices shooting up by Rs 35 a quintal in the beginning. They fell by Rs 10 a quintal towards the weekend. The S30 variety is, currently, quoted at Rs 1,225 a quintal, while M30 sells in a range of Rs 1,260-1,280 a quintal for mill delivery in Maharashtra.

For naka delivery, however, S30 is sold in a range of Rs 1,300- 1,320 a quintal, while M30 is quoted between Rs 1,380 and Rs 1,425 a quintal.

In Muzaffarnagar, too, the prices first surged by Rs 70-80 a quintal at the beginning of the last week on the government's decision to debar sugar mills, selling beyond their allotted quota, from all incentives, including export subsidy, transport subsidy and loans.

But, the prices slumped marginally later by Rs 20-30 a quintal, with the mills adhering to the government directive. Premium quality sugar, is, currently, quoted between Rs 1,350 and Rs 1,375 a quintal, while the normal variety sells between Rs 1,250 and Rs 1,290 a quintal.

Experts, however, believe the prices will remain depressed throughout the year because of higher production at about 27 million tonnes besides 6 million tonnes of stocks carried over from the last year.