Conditions favorable for strengthening sugar prices

30-Jul-2024 03:39 PM

New Delhi. Although the government is not very serious about the industry's demand to allow commercial export of sugar, there are some factors that can prove to be helpful in keeping the prices of this sweet item high and strong.

First of all, despite being the first month of the festive season, the Union Food Ministry has declared a free sale quota of only 22 lakh tonnes of sugar for August 2024, which is 2 lakh tonnes less than the quota of 24 lakh tonnes in July 2024 and 1.50 lakh tonnes less than the quota of 23.50 lakh tonnes in August 2023. A huge free sale quota of sugar was fixed from April to June.

Sugar demand and consumption is expected to increase well in August, while its free sale quota is relatively small.

Like July, the month of August also has 31 days. 21-22 lakh tonnes of sugar is consumed in the country in normal months. Sugar mills will not be forced to sell their quota in a hurry in August.

The Union Food Secretary has said that the government may consider the proposal to increase the ex-factory minimum selling price (MSP) of sugar in the next few days.

This has been a strong demand by industry organizations for a long time. If a positive decision is taken to increase the MSP, it will have a positive psychological effect on the market (in fact on the industry) and the price of sugar will increase somewhat.

Although at the national level, the sugarcane production area has increased from 57.05 lakh hectares last year to 57.68 lakh hectares this time,

but there is a possibility of damage to the crop due to drought in some parts of the most prominent producing state - Uttar Pradesh and floods in some other areas.

There is also a problem of water logging in Maharashtra, which is the second largest sugarcane producing state.

Meanwhile, dealers-stockists have started showing interest in buying sugar and this process is expected to continue in the future as well.