The Hindu Business Line : Transporters’ strike drives up sugar prices

Mumbai, Jan 8 Sugar prices seem to have started rising sooner than expected. Prices were slated to rise this year as the production was expected to be much lower than last year, but traders are baffled by the current spike in prices even as crushing continues in many States.

Sugar (small) prices in the Mumbai wholesale markets have increased to Rs 2,090 on Wednesday from Rs 1,870 a quintal on December 2. Similarly, medium grade sugar prices are up at Rs 2,165 from Rs 1,935 in December. In the last one week, prices have gone up by Rs 155 a quintal in the wholesale markets.

Buoyant demand

Tracing the price rise in the last week to the transporters strike, a trader said: “The supply in the wholesale markets was partially affected by the transport strike, while the demand was buoyant.”

Before the start of sugar season 2008-09 in September, the Government had estimated production at 22 million tonnes against 26.5 million tonnes last season. However, the industry estimates the production to fall below 20 million tonnes with an opening stock of 9 million tonnes.

Crushing delayed

Cane crushing in Uttar Pradesh was delayed due to issues over State advised price (SAP) for cane, while in Maharashtra insufficient rains had affected production.

For the 2008-09 crushing season, Uttar Pradesh has announced a SAP of Rs 137.50 per quintal of cane for the rejected variety, Rs 140 for general variety (up from Rs 125 from last year) and Rs 145 for early variety.

Sugar output in Uttar Pradesh may dip almost 30 per cent in 2008-09 crushing season following low cane production and under-recovery.

Sugar recovery was down to 8.75 per cent from 9.39 per cent last year due to the damage caused by floods and the heavy rainfall.

Crushing in Uttar Pradesh, which started in November, may wind up in February due to shortage of cane. Almost 20 million tonnes of sugarcane have been crushed, producing roughly 1.7 million tonnes of sugar till December, said a UP-based sugar company official.

In Maharashtra, crushing period has been reduced to 120-150 days from the normal 200 days due to shortfall in cane availability. Sugar production in Maharashtra was estimated to be lower by 39 per cent at 5.5 million tonnes against 9 million tonnes last year.

Of the 167 cooperative sugar mills in Maharashtra, only 121 have been able to start operations and of these five shut shop last week on the back of increase in cane prices.

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