Sugar prices ruled weak on Tuesday on report of producers resorting to distress sale for making payment and wanting liquidity. Continued selling by mills dragged naka rates by Rs 8-10 a quintal and spot prices also slipped Rs 5-7.

Tender rates dropped by Rs 5-10 a quintal. Higher demand for summer was met by higher arrivals and higher volume, as mills are continuously offloading to reduce stocks. The sentiment was weak, said traders.

Meanwhile sugar futures traded higher on Tuesday as speculators created fresh positions, anticipating a pick-up in spot demand from bulk customers for the summer. Analysts said expectations that demand will increase from neighbouring States and bulk consumers such as ice cream and soft drink makers helped the sweetener to trade higher.

A wholesaler at the Vashi market said producers were selling sugar at a price lower than the average cost of production. In Maharashtra, every kg produced is a loss of Rs 1.25-1.75 a kg, at the current price level for millers. Hence the overall belief is that sugar prices will not go down from the current level.

On Monday about 20-25 mills offered tenders and sold about 1-1.25 lakh bags (100 kg each) sugar in the range of Rs 2,625-2,680 for S-grade and Rs 2,680-2,760 for M-grade. At the Vashi market, arrivals were about 55-56 truckloads (each 100 bags) and local dispatches were 52-53 truckloads.

Bombay Sugar Merchants Association sugar rates:

Spot rates: S-grade Rs 2,752-2815 (Rs 2,766-2,815) and M-grade Rs 2,801-2,900 (Rs 2,801-2,901).

Naka delivery rates: S-grade Rs 2,720-2,750 (Rs 2,720-2,760) and M-grade was Rs 2770-2,850 (Rs 2,780-2860).

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