Sugar prices tumble 8% in one month

Sugar prices have tumbled more than 8 per cent over the past month in the domestic market on account of the higher release of non-levy quota sugar by the government and the expectation of a bumper production.

The government has released 41 lakh tonne of non-levy quota or free-sale sugar for the October-December quarter this year against 37 lakh tonne released during the corresponding quarter last year.

Sugar prices have fallen by Rs 130-150 a quintal, on an average, over the last month in the country. At present, sugar is selling at Rs 1,670-1,680 a quintal. "The delay in lifting the ban on exports and a declining trend in prices, internationally, are also affecting the domestic sugar prices," an industry source said.

Globally, sugar prices have dropped about 10 per cent over the past one month. London sugar futures have fallen from $406 a tonne to $364 a tonne.

"Sugar mills are trying to dispose maximum quantities they can, as there is an apprehension of prices going down further with the progress in crushing," he added.

However, the sugar futures have remained largely stable. M sugar for December delivery at the National Commodity and Derivatives Exchange is trading at Rs 1,763 a quintal.

The International Sugar Organisation has estimated the 2006-07 sugar output at 158.3 million tonne against consumption of 152.5 million tonne.

The country is expected to produce 23 million tonne in the 2006-07 season (October-September) compared with 19.1 million tonne last season.

The Union ministers of agriculture and finance have been making public statements about the likelihood of the withdrawal of the ban. However, no decision has been taken till date.

The ban on sugar exports, imposed in July, is to remain effective till March 31, 2007.