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Selling Pressure Drags Sugar Prices

15 Mar 2019 3:36 pm
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NEW DELHI (Commoditiescontrol) - Domestic sugar prices mainly for medium-grade fell at major markets in the country on Friday due to sluggish demand from bulk buyers against excess supply.

In Mumbai, prices were at Rs 3,155-3,236 a quintal for S-grade and at Rs 3,200-3,302 for M-grade, as per Bombay Sugar Merchants Association.

As per traders, buyers are currently not active in the market and selling pressure is also mounting day-by-day as sale quota fixed for March is higher than the monthly consumption.

The central government, which has been setting mill wise monthly sales quota since June 2018 on the demand of the industry, has allocated a quota of 24.5 lakh tonnes for March, higher than the February quota of 21 lakh tonnes.

Besides, prolonged winters this time has also affected demand from soft drink and ice-cream manufacturing companies. Summer season demand usually starts to emerge from first week of March but this yeat it is yet to kick in.

Furthermore, sluggish exports from India is also a deterrent for sugar prices. Government's target of 5 million tonnes of exports this season seem unlikely due to the disparity between international and local prices.

India has so far this season shipped out around 1.5 million tonnes of sugar and contracts have been signed for 2.2 million tonnes. The sugar industry, however, expects to export 3-3.5 million tonnes of the sweetener in 2018-19 (Oct-Sept).

Prime Minister Narendra Modi’s cabinet late last year approved incentives to encourage cash-strapped mills to export at least 5 million tonnes of sugar in the 2018/19 season to help prop up prices by trimming bulging stocks.

However, the latest move by the government will address the demand-supply mismatch in the medium-to-long term.

The Centre on last Thursday announced an additional soft loan of Rs 12,900 crore for sugar mills to create ethanol capacity under a recently launched scheme.

ICRA has said in a press release that the government's approval for interest subvention on soft loans to sugar mills to boost ethanol production is likely to address the current supply-demand imbalance in the industry and help increase mills' liquidity in the medium term.

(By Commoditiescontrol Bureau)

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