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Sugar prices steady as selling slows

07 Jun 2011 Evaluate

After a sharp decline last week sugar prices are ruling steady. In the physical market, good quality sugar increased by Rs 5-10 a quintal and routine quality dropped further by Rs 10 a quintal. To reduce selling pressure of stockists, naka prices improved Rs 10/Rs 20 a quintal.

Mill tender rates were steady as mills were not very keen to sell at lower levels. Most mills kept tender offers open. The volume was as usual but less than expected. Sugarcane has been planted on 50.61 lakh hectares till June 3 compared with 48.63 lakh hectares in the same period last year, according to the Government's latest estimate. Acreage was up by 1.98 lakh hectares.

Wholesalers said higher sugar quota for the month, selling pressure from mills and need based demand resulted in sugar prices falling Rs 60-70 in the spot market to below Rs 2,700 and below Rs 2,500 at mill level for S-grade. Due to less than expected local and upcountry demand inventory building is not happening. In Kolhapur, Karad and Sangli shortage of trucks resulted in freight rates firming up Rs 5-7 a bag, supporting firm sentiment and restricting dispatches to domestic markets.

Mills are also not very eager to sell at lower prices as it will lead to more losses. Volumes may turn stagnant as retail/consumption demands will ease once school and colleges reopen. Monsoon is likely to keep buyers away. However, with the end of crushing season this month some improvement (in demand and price) may be seen. White sugar prices have gone up from $580 to $693 a tonne in the last one month in the global market.

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