The Hindu Business Line : Sugar may fall on supply glut

WHOLESALE sugar prices may fall further this week on increased supply and quick offerings by a few stockists because of total additional free sale quota of 1.95 lakh tonnes released for the current month by the Government. Bulk buyers, on the other side, are adopting wait and watch policy.

In last three trading days, wholesale sugar prices were down sharply by about Rs 85-90 per quintal from a recent peak level of Rs 1,600 per quintal.

Sugar small grade (S-30) prices fell sharply to Rs 1,436-1,471 per quintal from Rs 1,486-1,545 last Tuesday. Medium grade (M-30) prices too dropped to Rs 1,475-1,515 per quintal from Rs 1,531-1,600.

Mills tenders for medium grade in Maharashtra were quoting lower by Rs 100 a quintal at Rs 1,445-1,450 from Rs 1,545 last Tuesday, a leading dealer said.

"Sugar prices may fall further on expanded supply and because majority of retailers and a few leading bulk consumers such as soft drinks and confectionery units are now reserved in their fresh buying as prices are weakening," a leading broker said.

"Thanks to the Government's prompt action, sugar prices have come down. For March, the Government may give additional quota of 2 lakh tonnes," Mr Kanhaiyalal Gidwani, Convenor of Action Committee for Essential Commodities of Shiv Sena Party, said.

"Out of an additional release of 1.95 lakh tonnes, Maharashtra mills will get roughly 40 per cent allocation (nearly 80,000 tonnes)," Mr Gidwani said.

"We are monitoring the situation on day to day basis and will keep giving further sanctions, if needed," an official said, after a meeting with Mr Sharad Yadav, Union Minister of Consumer Affairs. On Tuesday, the Centre released an additional quota of 1.5 lakh tonnes of sugar for indigenous free sale for February which could be lifted till March 7.

Already 10.5 lakh tonnes of sugar had been released as free sale quota for the month of February with a levy quota of two lakh tonnes.

The total availability of sugar for the month of February was 12.5 lakh tonnes prior to the release of 1.5 lakh tonnes of sugar as additional quota.