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Sugar prices touch record high, may go up to Rs 50 a kg

07 Jan 2010

Sugar prices touched a record high of Rs 4,250 per quintal in the Delhi wholesale market raising apprehension that retail prices could even go up to Rs 50 a kg. High prices could also trigger a marginal hike in prices of biscuits, confectionery, chocolates, cold drinks and other processed foods of urban mass consumption. The actual reason for the sharp hike in price could be lower estimates for sugar output this year, compared to the earlier projections of 16 million tonnes. Industry monitors now project sugar production at only 15.5mt, at best.

White sugar rose for a fifth day in London to the highest level in at least two decades on speculation a global supply shortfall will buoy demand and sustain prices. The price for immediate delivery at Vashi, India’s biggest wholesale market, advanced to the highest level since at least July 2005, data compiled by Bloomberg showed. Prices at Vashi climbed 3.5% to Rs 3,869 a quintal. Sugar at the market is priced to bridge the gap between the imported price and the domestic price.

According to analysts the gains in Vashi signal one thing that there is a stock-crunch situation in India, and prices are expected to remain firm for at least one year.

Sugar output in Maharashtra, the country’s largest producer, remained flat at 2.17 million tonnes till January 1 in the ongoing 2009-10 season beginning October even as mills have crushed more sugarcane. Ashok Jain, president of Bombay Sugar Merchants Association (BSMA), said, “Domestic production would be lower. Besides, problems on the import front are also prompting aggressive buying.”

In Kolhapur, a key market in top sugar producer, the price of the most traded S-variety sugar rose 2.93 per cent to Rs 3,820 per quintal on Tuesday (Jan 5) breaching an earlier peak of Rs 3,711.35 on Monday. “Sugar production in Maharashtra has remained flat despite higher crushing of sugarcane so far this season due to lower recovery. The sugar recovery has declined to 10.05 per cent so far this season as compared to 10.75 per cent in the previous year due to poor monsoon in the crucial months of June-July,” Maharashtra state co-operative Sugar Factories Federation, MD, Prakash Naiknavare said.

Souce: Agencies