News

Spot prices of sugar rose in the key wholesale markets of the country because of higher demand. Prices have also risen as mills in Maharashtra are withholding stocks. Demand is also higher as bulk and retail buyers usually replenish pipelines in the first few days of the month. The outlook on sugar prices is, however, bearish. The government may consider more duty-free sugar imports and bring back stock limits on sugar mills as well if prices continue to rise.

Futures contracts of sugar rose on NCDEX taking cues from the spot markets, where prices increased because of higherdemand ahead of Raksha Bandhan. The most-active October contract was up 0.4% from the previous close. The overall sentiment for sugar, however, is bearish due to concerns that the government may consider more duty-free sugar imports and re-impose stock limits on sugar mills this season if prices continue to rise.

Sugar output in Uttar Pradesh is seen rising over 13% to 10 million tonne in 2017-18 (Oct-Sep) from 8.79 million tonne in the current year that ends September. Output of sugar is expected to rise on the back of a rise in yield and higher recovery from cane. Acreage in the state, however, is not likely to vary a lot from last year. The rise in sugar output is not because of acreage, but due to expectations of increased yields.

Futures contracts of raw sugar on ICE rose to a two-month high of 15 cents a pound as Brazil may withdraw the recent hike in tax on ethanol, which would subsequently trigger demand for the bio-fuel. Brazil had last week increased taxes levied on gasoline by 0.41 Brazilian real per ltr and on ethanol by 0.2 Brazilian real. Millers in key cane-producing countries like Brazil have a choice between producing sugar and ethanol. The benchmark October raw sugar contract on ICE traded up 0.6% at 14.99 cents a pound.