The government set the sugar sale quota for March at 2.45 mln ton, higher than the February quota of 2.10 mln ton to cater to higher demand expected during the month. Demand for sugar usually picks up in March, ahead of Holi, because ice cream and soft drink makers start ramping up production before the summer season. The government had been limiting the sugar available for sale on a monthly basis to support prices and help mills clear cane arrears, which had hit 200 bln rupees at the end of January. All India Sugar Trade Association has pegged India’s sugar output in the ongoing season that started October at 31.5 mln ton, slightly lower than last year’s record production of 32.3 mln ton.

Higher availability of sugar in the market as mills rushed to liquidate stocks kept prices under pressure in Delhi and Muzaffarnagar. Pressure to sell unsold stock because of month end has kept sentiment subdued. Consumers are limited but sugar is abundant. Mills are likely to have large unsold stocks from the February sale quota of 2.1 mln ton. Prices will depend only on sale quota announced for next month due later. If the quantum is higher, prices will fall further. The government may fix the sale quota for March at 2.0-2.2 mln ton. Sugar S-grade ₹3,172-₹3,256 and M-grade ₹3,200-₹3,522.

Prices have been under pressure because of a surplus following successive years of bumper production. Mills in the country produced record 32.8 mln ton sugar in 2017-18 (Oct-Sep). This year though, production is seen slightly lower at 30.7 mln ton, overall surplus is likely to touch a new high due to a large carryover from last year. Extended cold weather conditions in Uttar Pradesh has also hit bulk demand. Due to gloomy situation of sugar prices, buyers are waiting for prices to fall further. On Intercontinental Exchange, the front-month May raw sugar contract traded at 12.9 cents a pound, down 0.5% from the previous close.

After hitting a two-week low of 12.8 cents a pound early this week, International sugar prices fell tailing weakness in global crude oil prices. any sharp decline in sugar prices was limited due to reports of a fall in world sugar production. A likely fall in global sugar production this season would support prices. Mills in Brazil’s centre-south region produced 26.36 mln tn of sugar in Apr 1-Feb 16, down 26.5% on year, the country’s sugarcane industry association.

The food ministry has sought Cabinet nod for granting soft loans of up to 100 bln rupees to sugar mills to help them clear cane arrears. statement given by government officials. Cane arrears had shot up to a record high of 200 bln rupees at the end of January, as sugar prices have been sharply lower than the average cost of production in the country this season due to a glut in the domestic market.