The Hindu Business Line : Sugar prices may go up on fears of short supply

Spot prices in Mumbai shot up by Rs 160-170 per quintal in both grade — Small-30 and Medium-30 — last week mainly because of paucity of ready stocks coupled with sustained buying from bulk consumers and retailers.

"Some speculators have created an artificial shortage with the hoarding of this essential commodity in the open market. However, the national quota allotted for the current month is enough to cater to the ongoing seasonal demand," a leading trader said.

Medium-30 grade prices touched 12 months' high at Rs 1,551 per quintal last Friday. Tenders of select sugar mills also rose by Rs 140 to Rs 1,350-1,440 per quintal.

"Spot prices are expected to increase by another Rs 150 per quintal following the attempts made by some speculators and hoarders to create artificial shortage in the open market," he said.

The artificial shortage is created by not releasing any sugar in the first half of the month thus creating a shortage. Normally, mills release sugar twice a month. The first part is released by the 15th of each month, sources said.

If this situation continues, retail price of sugar in Mumbai would go up to Rs 18-20 per kg, which is around Rs 16 a kg.

"We have requested the Central Government to release an additional free sale quota of at least five lakh tonnes for February and March. This release must be made prior to the February 10 ," Mr Kanhaiyalal Gidwani, Convenor of action committee for essential commodities of Shiv Sena Party, said.

"The Government is still holding a carry forward stock of more than 110 tonnes. The yield from the current years' crushing will be approximately 180 lakh tonnes," he said.