Sugar price fall Rs 50/100 kg

Sugar prices have fallen about Rs 50 per 100 kilograms today following a glut situation, said market players.

"In a fortnight, sugar futures have seen a 6 per cent fall. This is largely due to a good supply in the domestic market. Also, exports have been slower than expected," said a Delhi-based trader.

The May freesale quota was also positive and had put the total availability at 16.04 lakh tonnes for the month.

As for the exports, India has exported just about 5 lakh tonnes in the current sugar year (October-September). India holds a re-export obligation of 20 lakh tonnes till 2007 September.

Further, for the May contact on the NCDEX, deliveries are likely to remain high. Speculation is also being raised about the deliverable quality lying in warehouses, said a sugar analyst with a Mumbai-based brokerage house.

NCDEX warehouses at present have a stock of 22,456 tonnes sugar. NCDEX M-grade sugar May futures ended Rs 50 lower from previous close at Rs 1,900 per 100 kg after seeing an intra-day high of Rs 1,945 and low of Rs 1,883. The contract's open interest was 25,770 tonnes.

NCDEX M-grade sugar June futures ended Rs 39 lower from previous close at Rs 1,911 per 100 kg after seeing an intra-day high of Rs 2,047 and low of Rs 1,995. The contract's open interest was 75,840 tonnes.

Market players, however, hope that the tender which Indian Sugar Export Corporation Ltd (ISEC) would issue on Friday (May 19) would help push up prices. This tender of 1.5 lakh tonnes is to help ISEC supply sugar to Trading Corporation of Pakistan, under the free-sale quota.

Last week, ISEC had got this approval from the government.However, another section of the market said that as ISEC is not dependent on mills holding re-export obligation, the tender may not help push up prices. Commenting on the tender, ISEC member-secretary S L Jain said: "The tender will open on May 19.