Fluctuation in sugar prices due to limited demand

Weekly Sugar Market Review (9-15 November 2024)

Price Fluctuations
Sugar prices exhibited a mixed trend during the week, with rises in some regions and declines in others, despite adequate market supply. Prices softened in Uttar Pradesh, Punjab, Madhya Pradesh, and Bihar, with the mill delivery price falling by Rs 52-60 per quintal across these areas. Similarly, Gujarat saw a softening of prices.

Demand & Quota Impact
Sugar demand remained subdued, even with the onset of the wedding and festival season, which typically boosts consumption. The Central Food Ministry reduced the monthly sugar quota for sale in the domestic market from 25.5 lakh tonnes in October to 22 lakh tonnes in November. However, this reduction did not create a significant price surge, as supply continued to meet demand without causing any major shortages.

Spot Prices

• Delhi: Stable at Rs. 4150-4250 per quintal.
• Indore: Price fell by Rs. 30 to Rs. 3920-4020 per quintal.
• Raipur: Prices saw a slight increase, rising by Rs. 20-30 to Rs. 3900-4000 per quintal, driven by some buying interest.
• Mumbai (Vashi): Prices remained steady at Rs. 3650-3850 per quintal. Naka Port delivery prices were similarly stable at Rs. 3600-3800 per quintal.
• Maharashtra & Karnataka: Tender prices increased, with Maharashtra reaching Rs. 3420-3600 per quintal and Karnataka seeing prices rise to Rs. 3480-3640 per quintal.
• Kolkata: Spot prices softened by Rs. 30-40 per quintal.

Production Outlook
Sugar production in India is lagging behind last year's pace due to delayed cane crushing, which did not begin in most producing states until mid-November. As a result, domestic sugar production for the 2024-25 season is expected to be lower than the previous season. Given this, the possibility of price improvements in the future remains, though they may not materialize in the short term.

Export Restrictions
India's commercial sugar exports continue to be restricted, with the government maintaining a ban on exports to control domestic availability and price stability.

Conclusion
While sugar prices showed some regional fluctuations, the overall market remained stable due to adequate supply, despite a seasonal increase in demand. The reduction in sugar quotas and the delayed start to the crushing season may contribute to price movement in the coming weeks, but a significant price boom seems unlikely at this point.