Weekly Review-Sugar
23-Nov-2024 05:59 PM
Despite Lagnasara, sugar prices continue to soften due to weak demand
Market Overview: Despite the start of the Lagnasara season and auspicious festivals in mid-November, the demand for sugar remains weak, leading to a continued softening of sugar prices. This trend persists as the new season of sugarcane crushing and production picks up across major producing states. While domestic consumption remains normal, the government has maintained a ban on the commercial export of sugar, which further influences price fluctuations.
Free Sale Quota: The free sale quota for sugar in November has been set at 22 lakh tonnes, marking a reduction of 3.5 lakh tonnes from October’s quota of 25.5 lakh tonnes. Additionally, industrial demand for sugar has decreased, notably in the cold drink and ice cream sectors, as cooler temperatures in northern states affect production. The increased use of jaggery has also contributed to the weakening sugar demand.
Mill Delivery Prices: From November 16-22, mill delivery prices of sugar saw a decline in several regions:
- Eastern Uttar Pradesh: ₹18 per quintal drop
- Punjab: ₹50 per quintal drop
- Madhya Pradesh: ₹15 per quintal drop
- Bihar: ₹30 per quintal drop
- Gujarat: ₹40-50 per quintal drop Meanwhile, prices in western Uttar Pradesh remained relatively stable.
Spot Market Prices: Spot market prices displayed mixed trends:
- Indore: Fell by ₹70 to ₹3850-3950 per quintal.
- Raipur (Chhattisgarh): Increased by ₹20-25 to ₹3925-4000 per quintal.
- Mumbai (Vashi): Dropped by ₹30 to ₹3620-3820 per quintal.
- Naka Port Delivery (Mumbai): Also fell by ₹30 to ₹3570-3770 per quintal.
- Kolkata: Spot sugar prices increased by ₹10-30 per quintal. Tender prices in Maharashtra and Karnataka saw limited fluctuations.
Stock and Market Sentiment: The sugar market remains under pressure due to sufficient stock availability, and there is no urgency in purchasing, particularly in major consumption areas. The government's reluctance to increase the ex-factory minimum selling price of sugar, coupled with stable ethanol prices, continues to strain sugar mills' financial health.