Spot sugar hit a fresh 10-month low on Wednesday as millers trimmed prices to buttress demand, dealers said. Weak demand has left millers with significant stocks of free sale sugar. The government fixes the amount of sugar that each mill can sell in the open market every month.
"Milers are struggling to sell non-levy sugar quota. Despite a sharp drop in prices, demand is not picking up due to the monsoon season," said Harakhchand Vora, vice-president of the Bombay Sugar Merchants Association. Demand from bulk buyers—typically beverage and ice cream makers—reduces with the end of summer as lower temperatures cut demand for these products.
In Kolhapur, a key market in the top sugar producing state of Maharashtra, the price of the most traded S-variety sugar fell 0.7 per cent to Rs 2,475.65 a quintal, the lowest since August 1. The price has fallen nearly 38 per cent since a record high of Rs 3,972 on January 7, owing to an upward revision in output estimate and government curbs like stock limit on bulk consumers. The government hasn’t taken any step to discourage imports and that is weighing on sentiments, Vora said.
India is unlikely to impose an import tax on overseas purchase of sugar in the next 10-15 days as global prices of the sweetener are on the higher side, Agriculture Minister Sharad Pawar said on Monday.
Sugar stocks at the end of sugar year 2009-10 may stand at 4.9 million tonnes, the Indian Sugar Mills Association said in a statement on Monday.