The Hindu Business Line : Retail sugar turns dearer

SUGAR appears to be losing sweetness with its price steadily heading northward. On Thursday, retail sugar prices crossed the Rs 20 a kg mark on strong local demand against reduced supply at the wholesale level.

Wholesale sugar prices have risen by over 35 per cent during calendar 2004 mainly on sustained demand while supplies remained tight.

Spot prices at the wholesale level also reached Rs 19.50 a kg as tenders floated by mills were quoting higher by Rs 50 per 100 kg in a single day, which is an unusual rise in the recent past.

"As expected, spot prices have gone up today on lower-than-expected free sale quota for the next three months announced yesterday," a local trader said.

The Government allocated 12 lakh tonnes for January, out of total free sale quota of 34 lakh tonnes for the next three months.

At Vashi wholesale market, medium grade-30 prices were up Rs 50 at Rs 1,830-1,885 per 100 kg. Spot prices of M-30 grade at Muzaffar Nagar mandi went up Rs 53 to Rs 1,898.60 per 100 kg over the previous day.

Future prices also indicate a continued upturn. At NCDEX, February 2005 contracts moved up by Rs 59 to end at Rs 1,952 per 100 kg over previous day's close.

"Looking at the futures trend, spot prices are expected to go up further on reduced supply and steady demand," a broker said.

"The direct consumption by households as well as indirect consumption by bulk consumers and industries such as soft drinks, food products, confectionery are increasing. There is equal demand from households as well as the industrial customers, " a local miller said.

Production for the current season 2004-05 (October-September) is likely to fall to around 130 lakh tonnes (138 lakh tonnes), according to industry estimates. As against this, overall demand is growing at the rate of 4-5 per cent annually.