The Hindu Business Line : Sugar prices up as demand rises

DOMESTIC sugar prices have gone up by Rs 65/70 per quintal or nearly 5 per cent during the current month, mainly on fresh seasonal demand from retailers and bulk consumers coupled with average lower inflows from mills.

This is despite an additional free sale release of 1.09 lakh tonnes announced by the Centre last week.

Sugar prices in open market moved up to Rs 1,455/1,490 per quintal for small-30 grade and Rs 1,500/1,560 for medium-30 grade from Rs 1,360/1,420 and Rs 1,425/1,495 per quintal respectively, beginning of the month.

"It is significant that the Union Government's release of 1.09 lakh tonnes additional sugar quota over and above the original release of 14 lakh tonnes (with quota validity up to April 30) has not impacted market prices, once again due to good demand in the face of restricted stock arrivals," a leading sugar dealer said.

The move to release additional free sale quota was mainly to revalidate release orders for un-lifted free sale quota pending since October 2003. For April 2004, it has released a total quantity of 14 lakh tonnes With a levy quota of 2.16 lakh tonnes, total availability would be 16.16 lakh tonnes in April.

With additional release, total availability for the current month would be 15.09 lakh tonnes as against just 8 lakh tonnes during April 2003.

Last month, the Government hiked free sale sugar quota for the current quarter (April-June ) to 45 lakh tonnes from 26 lakh tonnes, an increase of 73 per cent, to keep prices under control.

"The reason for restricted arrivals is believed to be sugar mills' slow dispatches in expectation of better realisations in the context of an estimated sizable shortfall in the production to 145/150 lakh tonnes," trade sources said.

Owing to drought conditions, sugar output in Maharashtra, Karnataka and Tamil Nadu are expected to be lower in the current season 2003-04, sources said.