Sugar prices went up sharply on fresh buying from local and neighbouring states on Thursday. In the Vashi market, spot rates increased by Rs 20-25 in fair quality, while fine quality ruled steady. Naka rates improved by Rs 20 in S-grade and Rs 50 for M-grade. Mills have sold sugar through tender offer at Rs 20 higher on Wednesday. With new demand, support sentiment was firm, said traders.

An analyst said that the demand to allow exports of 10 lakh tonnes immediately by the national sugar federation body, NFCSF, have supported the sentiment as India's sugar production is expected to be higher than domestic demand in the second consecutive year. Government is also very keen to allow sugar exports but is hesitating to take the decision considering high food inflation pressure. Sugar millers have long demanded for more sugar exports. Meanwhile, refined sugar prices in the world market have softened by $45 after Diwali to $680 on Wednesday from $725 on October 24. Sugar producers are expecting the government to act promptly on the issue. On talks of possible increase in sugar export from the country, domestic sugar futures market also gained sharply.

Market sources said that in the Vashi physical market, fresh local demand and demand from mills of neighbouring states along with firm futures market, have improve the sentiment. Demand at the beginning of the month keeps the morale positive. About 2–3 rail rake (each of 27,000 bags) were bought by buyers in Maharashtra on Wednesday evening. Along with them, local stockiest have also started fresh covering. Local traders have bought about 65,000–70,000 bags through mills' tenders offer. Bargain buying was seen in sugar futures, spurred by delayed crushing in major producing states and hopes of sugar exports in the short term.

On Wednesday, 14–15 mills have sold about 1–1.25 lakh bags in the range of Rs 2,700-2,760 (Rs 2,680-2,760) for S-grade and at Rs 2,820-2,900 (Rs 2,800-2,900) for M-grade. With increase in local demand, Vashi market got 53-54 truckloads of arrivals, while local dispatches were 51-52 truckloads. Freight rates were steady but if demands from neighbouring states continues to improve, there are chances of an increase in freight rates. Meanwhile, if Government increases petrol and diesel rates soon, transportation costs will rise. In the world market, sugar futures marginally fell by $0.10 to $680.30 from $680.40 for December-11 futures on Wednesday.

Bombay Sugar Merchants Association sugar rates:

Spot rates: S-grade was Rs 2846-2900 (Rs 2821-2900) and M-grade was Rs 2941-3061 (Rs 2921-3061).

Naka delivery rates: S-grade was Rs 2780-2850 (Rs 2760-.2830) and M-grade was Rs 2920-3020 (Rs 2870-3010).

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