Demand for fair-quality S-grade sugar lifted its prices by Rs 20-25 a quintal on Tuesday when markets opened after three days of festival holidays.

Physical prices have increased after the Centre allowed exports of additional five lakh tonnes last Friday. Arrivals were higher than dispatches as mid-month demand eased and buying remained need-based. The Union Government has declared 17.03 lakh tonnes of non-levy sugar quota (17.00 lakh tonnes normal and 0.03 lakh tonnes sugar processed out of imported raw sugar) for August, against total 15.6 lakh tonnes for July. It has increased the levy quota for August to 2.22 lakh tonnes from 2.12 lakh tonnes in July.

However, a higher quota will not push up prices any further as producers have to sell the allotted quota till month-end.

Arrivals increased to 68-70 truckloads of 100 bags each as the market opened after holidays, while local dispatches were limited to 54-55 truckloads. Freight rates remained uncahnged. Sugar futures fell during the day as speculators reduced positions amid higher supplies, but pick-up in spot demand ahead of the festive season checked the losses.

Market sources said 18-20 mills offered tenders and sold 75,000-80,000 bags of a quintal each at Rs 2,640-2,670 (Rs 2,600-2,670) for S-grade and at Rs 2,670-2,750 (Rs 2,670-2,750) for M-grade on Friday. Bombay Sugar Merchants Association's spot rates: S-grade Rs 2,741-2,782 (Rs 2,716-2,855) and M-grade Rs 2,786-2,951 (Rs 2,781-2,951).

Naka delivery rates: S-grade Rs 2,690-2,730 (Rs 2,670-2,730) and M-grade Rs 2,750-2,870 (Rs 2,750-2,870).

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