Sugar mills seen under pressure to exhaust sale quota

Sugar prices remained unchanged on Wednesday, thanks to a steady demand-supply situation. However, as the due date (June 10-15) for mills to exhaust their sale quota is approaching, resale selling pressure may increase, said traders.

Prices in the Vashi wholesale market were steady on ample supply and limited retail demand. The onset of the monsoon and fear of demand from stockist-traders easing also weighed on the sentiments. Stockists may, therefore, avoid building up inventories.

According to a wholesaler, ample arrivals from mills and fresh covering by retailers before the monsoon have kept the market active with small variation in prices.

In the spot market, the prices were Rs 2-5 a quintal higher depending on the quality. Naka and mill tender rates were steady. There could be some selling pressure in the coming days as some stockists who have booked the commodity have to lift the material from mills by June 10-15.

Other producers will also be under pressure to sell as they have to complete their quarterly free-sale quota before the month end.

At the current price level, it is difficult to export as expected. Moreover, neighbouring States buying in Maharashtra has been lacklustre since long due to higher production in most of the producing States.

According to the industry, total sugar production in 2011-12 will be 260 lakh tonnes, while domestic consumption will be around 220 lakh tonnes.

In the Vashi wholesale market, 52-53 truckloads arrived, while local dispatches were 50-51 loads. On Tuesday, 15-16 mills offered tenders and sold about 43,000-45,000 bags to local traders at Rs 2,770-2,830 (Rs 2,775-2,830) for S-grade, and Rs 2,840-2,910 (Rs 2,840-2,910) for M-grade.

The Bombay Sugar Merchants Association's spot rates: S-grade, Rs 2,920-2,971 (Rs 2,920-2,971); and M-grade, Rs 2,992-3,136 (Rs 2,992-3,136).

Naka delivery rates: S-grade, Rs 2,860-2,900 (Rs 2,860-2,900); and M-grade, Rs 2,950-3,010 (Rs 2,950-3,010).