NEW DELHI: Sugar prices moved up 15 percent in August due to an overall improvement in trade sentiment following the government’s decision to promote exports, despite global surplus.
In the Vashi market, sulphur sugar (sugar S) prices shot up to Rs 2,496 a quintal on Tuesday from Rs 2,172 a quintal early this month. Similarly, medium sugar (sugar M) prices jumped 11 per cent to Rs 2,312 a quintal from Rs 2,566 a quintal in August.
In futures, however, sugar prices fell sharply on the National Commodity and Derivatives Exchange (NCDEX) on profit booking on Tuesday after hitting the upper circuit on Monday. Sugar M for delivery in October fell 2.68 per cent or Rs 65 to trade at Rs 2,356 a quintal on Tuesday. Similarly, sugar M for delivery in December fell by 3.15 per cent or Rs 78 to trade at Rs 2,401 a quintal.
“Sugar prices have moved up on improved market sentiment on positive government’s decisions. Proportionate increase has been seen in ex-factory realisation also,” said Abinash Verma, director-general, Indian Sugar Mills Association.
Although the government has been taking a slew of measures to promote the sugar industry, excessive domestic production and large carryover stocks have pushed the initiatives into doldrums.
The government announced Rs 6,000 crore interest-free loan to sugar mills so that they could pay cane arrears to farmers. The government proposed to bear interest to the tune of up to Rs 600 crore in the first year. But, overburdened sugar mills could not avail these loans, as they do not want to increase their loan book further to pay cane arrears, which could hamper their borrowing capacity to raise working capital for the next crushing season.
Consequently, sugar mills across the country have applied for less than 20 per cent the amount allocated under the interest–free scheme. The government is also in the process of signing a barter deal with importing countries to push four million tonnes of the sweetener out of the country. India has been able to export only 1.26 mt of sugar up to April 2015.
“The barter deal for sugar exports from India may take many months and hence, cannot be stressed upon,” said a senior industry official.
The total sugar production in India is estimated at 28.3 million tonnes in 2014-15 against its annual demand of around 24 million tonnes. With an estimated 10.2 million tonnes of carryover stocks from the current year and 28 million tonnes of output, the total availability of sugar in 2015-16 is forecast to remain at a staggering 38.2 million tonnes.
Meanwhile, the global sugar production this year is estimated to exceed demand by 620,000 tonnes.
