Undercurrent bearish in sugar

Sugar prices across the country rule steady at lower level on Tuesday. Due to Chrismas bank holiday volume was lower at mill level. At Vashi market sugar prices in spot declined further by Rs20 – Rs30 a quintal as stockists released poor quality at lower rates to make room for fresh stocks. Naka and mill tender rates were unchanged as producer hold back to offload stocks at lower rates. Moral was steady said sources.

Vashi based wholesaler said in spot poor quality stocks were offloaded by stockiest at lower rates while they kept price for fair-fine variety unchanged despite routine lower demand in end of the month. Though sugar mills have started selling old stocks at lower price but were not keen to sell mush of new stocks below parity.

Local market has witnessed ample supply this month. Due to continuous selling by mills tender rates already drop by Rs100 - Rs150 till now. Free sale quota of 70 lakh tonnes for Dec – March is sufficient to meet the local demand hence inventory buying sentiment is lacking among traders.

Analyst said, considering higher cost of production after rise in cane price this year either millers will suffer heavy losses if the prices are not stabilise or government may come out with some price supportive measures to protect the sugar industry.

As per Industry estimate cost of production ranges between Rs3300 – Rs3500 while current market price are below that level.

In Vashi market arrivals were 62-63 truck loads (Each of 100 bags) while dispatches were 58– 60 truck loads. On Monday about 18-20 mills and sold about 57,000 - 58,000 (Each of 100 kgs) bags to the local traders at steady price of Rs3,150-3,220 (Rs3,150-3,220) for S-grade and Rs 3,230 - 3,340 (Rs3,230 - 3,340) for M-grade.

source: business line