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Spot sugar prices rose for the third consecutive day by Rs 15-Rs 20 on Thursday at the Vashi terminal market.
At the spot and mill level, conditions improved on strong expectations that the Government could soon take positive steps in favour of the sugar sector to protect it from making losses. Naka rates also increased in line with the mills' tender offer. Volumes improved on higher demand form local and other State-level markets.
According to the industry, mills are currently selling their produce below cost price in the open market. During January and February, higher free sale quota, unexpected lower demand and a continuous decline in prices saw Maharashtra's mills make a heavy loss by selling at less than cost price.
The Government has declared 16.23 lakh tonnes of free-sale sugar quota for the current month, less than January's quota of 17 lakh tonnes. The Indian Sugar Mills' Association last estimated the country's sugar production at 250 lakh tonnes in the season year 2010-2011.
Mr Jagdish Rawal, a wholesaler, said sentiment has improved since Wednesday on expectations that the Government may allow sugar exports as the mills have demanded lower quota for March 2011, extension of time for the current month quota and export permission. Fresh buying by the local and neighbouring States supported prices. Market players are now expecting some positive steps from the Government in view of the declining food inflation. In support of the fresh demand, freight rates at the mill level have also firmed up by Rs 5-Rs 7 per bag.
On Wednesday evening, 12-14 mills came with tender offers and sold 38,000-40,000 bags (previous day 1.75-2 lakh bags each of 100 kg) in the range of Rs 2,680-Rs 2,710 for the ‘S' grade and Rs 2,725-Rs 2,780 for the ‘M' grade. Arrivals in the markets were higher at 53-55 truck loads (each of 100 bags) and local dispatches were at 50-52 truck loads. The morale was bullish, he added.
Bombay Sugar Merchants Association sugar rates:
Spot rates: S grade Rs 2,791-Rs 2,851 (Rs 2,786-Rs 2,851) and M grade Rs 2,831-Rs 2,911 (Rs 2,831-Rs 2,901).
Naka delivery rates: S grade Rs 2,740-Rs 2,770 (Rs 2,730-Rs 2,760) and M grade Rs 2,800-Rs 2,860 (Rs 2,780-Rs 2,830).
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