Spot sugar prices on the Vashi wholesale market continued to post moderate gains on Friday.

Rates rose by Rs 10 a quintal on the fourth day of a rally in which prices have increased Rs 100-150 a quintal, following a jump in mill tender rates and lower-than-expected free sale quota for the September quarter.

Naka rates increase by Rs 20-30 for S-grade, while M-grade ruled steady. Mill tender rates were higher by Rs 20-30 on bullish sentiment due to festival demand. The sentiment was firm, said sources.

According to market sources, sugar prices touched to highest level this year crossing Rs 3,300 a quintal mark in spot and may rise further as a series of festivals, which is started from Ashadhi Ekadashi last week, is set to extend till December. Supply will be depend solely on availability with producers as crushing season is over in India.

As we have free sugar exports (under the open general licence regime) chances of more exports of sugar are improving with the rise in international prices – prices increased almost $80 a tonne in last one month.

The new crushing season will start from October. Delay in monsoon arrival by a month in main producing centres is a cause for concern for standing sugarcane crops in the fields. Erratic monsoon will lead to a lower yield and production, sources said.

A wholesaler said local demand improved in the beginning of the month while millers are resilient to selling pressure, expecting higher prices. Fresh demand from the East (one rail rake of 27,000 bags was sold on Wednesday) and fresh buying from Gujarat, Rajasthan and Madhya Pradesh in Maharashtra have pushed up the sentiment further.

Deficient rain across the country and concern over the Kharif crop is another factor fuelling an upward move.

At the Vashi market arrivals were 54-55 truckloads and local dispatches were 50-52 truckloads. On Thursday 25-27 mills sold about 75,000-80,000 bags (each of 100 kg) to local traders at higher price of Rs 3,020-3,070 (Rs 2,990-3,060) for S-grade and Rs 3,080-3,150 (Rs 3,050 -3,140) for M-grade.

Bombay Sugar Merchants Association's spot rates: S-grade Rs 3,102-3,172 (Rs 3,092 -3,161) and M-grade Rs 3,211- 3,301 (Rs 3,210- 3,291).

Naka delivery rates: S-grade Rs 3,100 -3,140 (Rs 3,070 -3,120) and M-grade Rs 3,170-3,250 (Rs 3,180-3,250).

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