The Hindu Business Line : Additional release of sugar to keep prices on leash

Turning bitter
The Centre has released three lakh tonnes of additional sugar for the Jan-March quarter.
Availability in March is 18 lakh tonnes, including a carryover of unutilised quota of 2 lakh tonnes.

M.R. Subramani

Chennai, Feb. 5 The Centre’s move to release additional sugar under the free sale quota for February and March is likely to keep physical prices of the sweetener under control.

“For instance, 16 lakh tonnes of sugar will be available for sale through the open market during March. This is like sugar being made available during Diwali. Such huge quantity will give no chance for prices to increase,” said Mr Praful Vithlani of Jagjivandas Keshavji and Co, a sugar brokerage firm.

Initial release

The Centre initially released 13 lakh tonnes (lt) each for January and February and 15 lt for March. Apart from this, two lt were to be available each month for sale through the public distribution system or ration shops from January to March.

However, towards the middle of January, it released an additional one lt for that month and it was to be lifted from the factories by January 31. On January 31, it released an additional one lt for February through free sale before allocating another one lt for March.

Govt norms

As per the Government norms, the Centre decides on the quantity of sugar that can be sold in the open market and through ration shops. The allocation is made month-wise in an effort to ensure that the market does not crash due to oversupply. At the same time, any shortage, especially during festival periods, is also overcome through additional allocation.

Carryover

“What has happened is that only 12 lt of the 14 lt allocated for January has been lifted. That two lt have been carried over to this month,” Mr Vithlani said.

Of the two lt that was not lifted, one lt was in Tamil Nadu, 60,000 tonnes in Maharashtra and 40,000 tonnes in other parts of the country.

“Along with the carryover, 16 lt of sugar are available for sale this month. We expect only 14 lt to sell, and again there could be a carryover of two lt. This will mean 18 lt will be available for sale in the open market in March,” he said. With such a trend, chances of prices gaining are bleak, according to Mr Vithlani.

Drop in output

The Centre, too, is keen on ensuring that sugar prices do not flare up. Sugar prices have begun to move since the beginning of this year on reports of a lower than expected sugar production. The output, which was initially expected to top 300 lt, is now projected at a little over 270 lt. The Union Agriculture and Food Minister, Mr Sharad Pawar, last week said the production was expected to be around 260 lt. Production is expected to drop further to 250 lt next sugar year starting October. Last year, production was 283 lt.

Current quotes

Medium or M-30 sugar on Tuesday was quoted at Rs 1,490 a quintal against Rs 1,446 on November 1 last. The price had increased to Rs 1,513 on January 25 before finding moving down. Small or S-30 sugar was quoted at Rs 1,430 against Rs 1,450 on January 25 and Rs 1,365 on November 1 last.

On MCX, small sugar closed at Rs 1,368 a quintal for March delivery and Rs 1,346 for delivery this month. On NCDEX, March contract was quoted at Rs 1,454 and that of Febuary at Rs 1,414. Quotes on both the exchanges were down compared with Monday.

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