The spot price of M grade sugar declined by Rs 5, while that of S grade ruled steady on Tuesday, on account of need-based demand and selling pressure at the mill level to finish the monthly quota. Naka and tender rates were unchanged. Stockists remained on the sidelines as demand proved to be weak and less than the arrivals, resulting in higher inventory build-up. The morale was steady on expectation of lesser quota for the month of April-11, said traders.

Wholesale traders told Business Line that with a higher production of about 240-245 lakh tonnes are expected this year, and the supply position will be comfortable. Traders are not willing to bet for the long term. The sentiment is to have stock at par with the demand.

On the other hand, mills are not willing to sell at a lower price to avoid losses. Selling pressure at the mill level will increase for a day or two, as they have to sell the allotted quota before the month-end. Of the current month's total of 16.84 lakh tonnes of free sale quota, the mills still have to sell a good amount of sugar. But the demand is not as expected.

Now all are awaiting the announcement of the April-11 free sale quota. Some market players are of the view that the Government may declare a lower quota ( about 15.50 lakh tonnes) to stabilise the market price.

On Monday, 10-12 mills came with a tender offer and sold 45,000-50,000 bags at Rs 2,670-2,690 for S grade and Rs 2,710-2,750 for M grade. Some mills have stopped calling for tender owing to the poor response, and buyers keen on lower rates. Arrivals in the Vashi market were at 48-50 truckloads (each of 100 bags). Local dispatches were lower at 45-46 truckloads.

Bombay Sugar Merchants Association sugar rates: Spot rates: S grade, Rs 2,788- 2,831 (Rs 2,788-2,831) and M grade, Rs 2,826-2921 (Rs 2,831-2,921).

Naka delivery rates: S grade, Rs 2,750-2,780 (Rs 2,750-2,780) and M grade, Rs 2,795-2,875 (Rs 2,795-2,870).

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