Prices of sugar in key markets of Delhi and Kolhapur were steady in lacklustre trade ahead of the weekend. In Delhi and Kolhapur, the medium-grade variety of the sweetener was sold at 3,150-3,250 rupees per 100 kg and at 3,150 rupees, respectively. “Prices are steady as there is not much trade happening ahead of the weekend. Also, the demand is declining as people are reluctant to purchase sugar at higher rates. However, prices of sugar fell in key wholesale markets of Mumbai due to higher production in Maharashtra. Medium-grade sugar was sold at 3,250 rupees per 100 kg in Mumbai, down 30 rupees from the previous close. Sugar production in Maharashtra was at 2.90 mln tn during Oct-Dec, higher than 2.57 mln tn in the corresponding period a year ago, according to Indian Sugar Mills Association.
However, prices rose in Muzaffarnagar due to lower sugar production in Uttar Pradesh. Medium-grade sugar was sold at 3,330 rupees per 100 kg in Muzaffarnagar, up 50 rupees from the previous close. In Uttar Pradesh, the country’s top sugar producer, mills produced 3.1 mln tn of the commodity during Oct-Dec, lower than 3.3 mln tn a year ago. As of Dec 31, 117 mills had started crushing operations for the season against 116 a year ago in Uttar Pradesh. In India, 501 sugar mills were crushing cane, compared with 505 mills a year ago.
Sugar prices may gain support in coming days due to lower-than-earlier-estimated production following by a decline in sugarcane availability in major producing states such as Uttar Pradesh, Karnataka and Maharashtra. Indian Sugar Mills Association had, in September, scaled down its forecast for the country’s sugar output in 2018-19 to 31.5-32.0 mln tn from 35.0-35.5 mln tn projected earlier, because the cane crop in key producing states was hit by adverse weather conditions. Last year, mills across the country had produced a record 32.3 mln tn of sugar.
Maharashtra State Cooperative Bank Ltd will give a bridge loan to sugar mills in the state against export subsidy receivables from the Centre, which will enable banks to release a large amount of sugar stocks mortgaged by around 100 sugar mills in the state for export. The quantum of the loan will be fixed by taking into account two factors–the total crushing in the previous three years or in the 2018-19 season, whichever is lower; and 90% of the total subsidy receivable at 13.88 rupees per 100 kg on allocated exports, according to a circular issued by the bank.