Despite various Government measures, sugar prices continued to rise and hit a record high on the wholesale market in Mumbai on Friday.
Medium sugar quality (M-30) firmed up by Rs 280 a quintal to Rs 3,380 from Rs 3,120 a quintal on Thursday. Small sugar quality (S-30) hardened by Rs 270 a quintal to Rs 3,280 a quintal (Rs 3,010).
With production set to hit a three-year low of 14.7 million tonnes in the sugar season (October to September), stockists are on a buying spree in spot markets across the country in anticipation of a sharp rise in prices in the coming months.
Mr Mohan Gurnani, Chairman, Bombay Sugar Merchants’ Association, said, “We have not seen such high sugar prices in the Vashi market. Good buying by stockists ahead of the festive season has pushed up prices.”
Import plan
The Government plans to import four million tonnes of sugar to make up for the loss of production in the kharif season. The sugar companies had contracted to import six lakh tonnes of white sugar till August-end.
Bajaj Hindustan has contracted to import a total of seven lakh tonnes of raw sugar this year and Balrampur Chini Mills will import about one lakh tonnes.
The Government decision to rely on imports may also turn costly as the international prices have also shot up substantially on a global shortage. Many companies have put off their plans to sign agreements to import raw sugar as it would not make economic sense to contract at such prices, said an analyst.
Sugar prices in London have been on a steady rise in the last few sessions on expectations that the output in Brazil will be lesser than the April estimate of 31.2 million tonne, besides the large-scale imports announced by India. Indonesia, another major sugarcane grower, has cut its cane output estimate due to dry weather conditions in the country.
The London-based International Sugar Organisation (ISO) has raised the global sugar deficit forecast for 2009-10 to 8.4 million tonnes.
World production was seen climbing to 159 million tonnes from 154.2 million tonnes logged last year but remained well short of global consumption of 167.4 million versus 164.6 million.
Stocks at the end of the 2009-10 season were seen falling to 53.2 million tonnes from 61.7 million a year ago, with the stocks to consumption ratio of 31.8 per cent the lowest in 20 years, it said.
The ISO also widened its estimate for the 2008-09 global sugar deficit to 10.4 million tonnes from a previous prediction of a 7.8 million tonnes deficit.
Source : moneycontrol.com