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Sugar price rise may continue till start of rains: ISMA

Sugar prices across the country have been on the rise, increasing by around R700 per quintal over the past month.

Sugar prices across the country have been on the rise, increasing by around R700 per quintal over the past month. Senior officials from Indian Sugar Mills Association (ISMA) say the price rise may continue till the onset of the monsoon.

Officials, however, have ruled out fears of a weak monsoon impacting crop production for the next season because of El Nino. They maintain that crop estimates for the next season could remain nearly the same as the current season and there should be no major swings in the market.

Abhinash Verma, director general of ISMA, says there is room for more price correction. ?In October 2012, prices were R36 per kg ex-mill as compared to R33 per kg today while prices in Maharashtra mills are around R31-32 per kg as compared to R35 per kg in the same period last year. Prices are lower by R6-8 per kg in some parts and there has been negative inflation. Moreover, the prices have been much lower than cost of production and, therefore, there has been a price correction in the market,? he explained. More significantly, the two government measures of providing soft loans as well as export subsidy have helped support and bring up prices, he added.

?These measures have improved liquidity and removed distress to that extent from the mills. The government has also offered incentives for export of raw sugar to the tune of 4 million tonne and the contracts have been made, with the result that surplus sugar should be out of the country, and this has boosted market sentiment,? he said. ?The current surplus stock is around 1 million tonne and we should close the season with surplus stock of 2.5 million tonne,? he added.

With the onset of summer, demand from beverage manufacturers is also on the rise and this should help increase prices, according to Verma, who pointed out that all three factors together are helping improve prices.

On fears over the impact on crop because of weak monsoon, he said cane is an irrigated crop and water levels in reservoirs of Maharashtra and Karnataka are good.

The Maharashtra Sugar Brokers Association has, however, expressed concern over the rise in prices by R700 per quintal on the eve of the elections despite a carry forward balance stock of 8.5 million tonne from the previous year.

Yogesh Pande, president of the association, alleged that the trade is being dominated by powerful speculators and hoarders, especially when international sugar prices are steady in the range of $455 per tonne. The hike is surprising when prices had crashed to R2,400 per quintal a couple of months ago, he said.

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First published on: 11-04-2014 at 04:22 IST
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