Sugar under pressure on higher supply

Sugar prices ruled weak on Tuesday as the market witnessed ample supply and steady local demand. Spot prices at Vashi wholesale market declined by Rs 5 for fair quality stocks while fine quality goods ruled unchanged.

At the Naka and Mill tender level, rates drop by Rs 10-20 a quintal. Volume was routine. Transport charges increased by Rs 5 a bag in last two days. The sentiment was steady, said traders.

Prices were pressured by limited mid-month local demand and continued selling at current rates by some producers brought more supplies to the market, said a wholesaler. Sugar futures, on a declining trend, weighed on sentiment. Sugar futures were down by Rs 20-25 till noon.

Despite reports of lower-than-expected production in Maharashtra, sugar prices have not been affected due to overall higher production this year and absence of neighbouring states' buying and less chances of exports.

Crushing season is on now and producers are willing to avoid big inventory stocks. Retail demand is expected to improve in the last week of the month.

In foreign markets, sugar prices have increased steadily since last week but prices have not touched a level that widens possibilities of exports from India. The sugar industry is demanding total decontrolling of the sector.

Continued absence of demand from neighbouring States in Maharashtra kept millers from offloading sugar in local markets, which are currently passing through need-based routine demand, traders said.

Meanwhile arrivals in Vashi market was 52-54 truckloads and local dispatches were around 47-48 truckloads. On Monday, 20-22 mills offered tenders and sold about one lakh bags in the range of Rs 2,760-2,840 (Rs 2,780-2840) for S-grade and Rs 2,860-2,940 (Rs 2,870-2,940) for M-grade. In world market, a March-12 futures was up by $3.40 to $625.50 ($622.10) while May-12 futures closed higher at $605.50 ($603.10) on Monday.

source: BL