Sugar prices jump Rs 1/kg post govt’s capping of sales by mills
, ET Bureau|
Feb 12, 2018, 10.33 AM IST
Pune: Sugar prices jumped by Rs 1/kg to Rs 30.50/kg immediately after the Central government capped sales by mills for the next two months starting Thursday. However, traders are worried that unless excess stocks are taken out of the country, there would be a bigger carry-over into the next season, when record output is likely.
Spot prices of M 30-grade sugar in New Delhi had tumbled by 6% between January 10 and 31. However, during the past week, prices recovered by more than 3%, responding to two policy decisions.
The Central government increased import duty on sugar on Tuesday to 100% from 50% to nip in the bud the possibility of subsidised sugar imports from Pakistan. This was followed by the cap on sales by mills for February and March in an effort to support prices.
In response to these decisions, buying interest was reported among consumers and bulk users. However, the temporary cap on sugar sales is not the solution for the industry because excess sugar will still remain in the country. "Either re-introduction of the monthly release mechanism as it existed before deregulation for a substantial period of time or taking excess sugar out of the country will be required to avoid a bigger disaster in next year," said Abhijit Ghorpade, a sugar broker from Maharashtra.
By limiting mill sales, unsold stock of sugar will accumulate and be carried forward to next year, worsening the sector's financial condition.
However, Raju Shetty, farmer leader from the sugarcane growing belt of south Maharashtra, opposed the reintroduction of monthly release mechanism.
Spot prices of M 30-grade sugar in New Delhi had tumbled by 6% between January 10 and 31. However, during the past week, prices recovered by more than 3%, responding to two policy decisions.
The Central government increased import duty on sugar on Tuesday to 100% from 50% to nip in the bud the possibility of subsidised sugar imports from Pakistan. This was followed by the cap on sales by mills for February and March in an effort to support prices.
In response to these decisions, buying interest was reported among consumers and bulk users. However, the temporary cap on sugar sales is not the solution for the industry because excess sugar will still remain in the country. "Either re-introduction of the monthly release mechanism as it existed before deregulation for a substantial period of time or taking excess sugar out of the country will be required to avoid a bigger disaster in next year," said Abhijit Ghorpade, a sugar broker from Maharashtra.
By limiting mill sales, unsold stock of sugar will accumulate and be carried forward to next year, worsening the sector's financial condition.
However, Raju Shetty, farmer leader from the sugarcane growing belt of south Maharashtra, opposed the reintroduction of monthly release mechanism.
