The sugar market continued to decline on Tuesday, extending the price-dip further by Rs 8-10 a quintal on the spot and Rs 10-12 in Naka and mill tender rates. Prices were lower than the cost parity, attracting fresh buying from stockists on Monday, resulting in higher volumes at upper levels. However, local demand was steady due to monsoon and the beginning of end-of-month buying support. The sentiment was weak as mills have to offload a substantial quantity of the current month's free sale quota, said traders.

As there is no sign of a surge in demand due to rain and expectations of ample supply in the current season on higher production, and absence of support in the export front keeps overall sentiment subdued, said a wholesale trader. Maharashtra's mills have started selling at reduced rates according to their requirement – same strategy followed by other main producing centres – keeping upcountry buying in Maharashtra almost negligible since start of the month. Between June 1 and 14 sugar prices have come down by Rs 85-90 for S-grade and Rs 90-95 for M-grade at the mill level. However, in spot market, due to the continued support of need-based local buying, the decline was restricted to Rs 70-90 for S-grade and Rs 50-60 for M-grade, indicating preference for M-grade.

Mr Harakhchand Vora, vice-president of Bombay Sugar Merchants Association, told Business Line: “Considering below parity current market rates for mills, most of the players including stockists have now started buying according to their need as they believe that there is less risk of a further downside. Upcountry/ neighbouring States buying has still not improved as expected because of better supply from other producing states such as Uttar Pradesh, Karnataka, Gujarat, etc. Freight rates in Maharashtra, which recently was increased sharply, have now eased by Rs 7-8 a bag, weighing on the sentiment. Considering all factors, sugar prices may stabilise at current level, he said.

Sources said 25-26 mills offered tenders on Monday and sold about 90,000-95,000 bags of sugar (100 kg each) in the price range of Rs 2,450-2490 for S-grade and Rs 2,480-2,560 for M-grade. Arrival in the market was 49-50 truckloads (100 bags each) and local dispatch was about 47-48 truckloads.

The Bombay Sugar Merchants Association sugar rates were : Spot: S-grade Rs 2,592-2,652 (Rs 2,600-2,652) and M-grade Rs 2,661-2,791 (Rs 2,668-2796).

Nakadelivery rates : S-grade Rs 2,540-2,590 (Rs 2,550-2,600) and M-grade was Rs 2,610-2,700 (Rs 2,620- 2,700).

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