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They mentioned costs have softened 1.5-2% within the final three weeks alone regardless of the assist from exports as a number of mills continued to produce sugar above their month-to-month allotted quota.
Merchants mentioned they don’t see costs recovering earlier than the top of cane crushing operations in April.
“Sugar costs have declined by Rs60-80/quintal ex-mill throughout the previous couple of weeks because the market appears to be oversupplied,” mentioned Jaydeep Patil, managing director of Dr DY Patil Cooperative Sugar Mill in Kolhapur, Maharashtra.
The central authorities fixes a sale quota for sugar mills each month to examine extra provide and the resultant fall in costs, which had earlier led to delays in fee of cane dues to farmers.
“Many sugar mills are promoting sugar a lot above their month-to-month quota for numerous causes,” a dealer from Maharashtra mentioned on the situation of anonymity. “Some have been servicing loans at exorbitant rates of interest, whereas some mills don’t need to carry ahead big shares after the crushing season is over.”
Though sugar costs have a tendency to stay subdued whereas the cane crushing operations are underway, the trade thinks the extent of downward motion in costs is greater than anticipated. “When in comparison with the value ranges throughout Diwali, sugar is promoting cheaper by Rs 4/kg ex-mill,” mentioned AbjijitGhorpade, a Maharashtra-based sugar dealer.
Rajendra Yadav, managing director at Someshwar Cooperative Sugar Mill in Baramati, Maharashtra, mentioned the value of S30 grade sugar has fallen to Rs3,220/quintal from Rs 3,280/quintal in mid-December. “We aren’t in a position to perceive why the home costs are subdued. Decrease demand has affected our home gross sales. We couldn’t promote 40% of the December quota, whereas near 50% of the January quota can be more likely to stay unsold,” he mentioned.
Based on trade insiders, the slower tempo of exports and allocation of additional quota for the home market in lieu of the export quota swapped by some sugar mills are a number of the different attainable causes for a sluggish sugar demand.
Based on commerce physique All India Sugar Merchants Affiliation (AISTA), sugar mills have thus far dispatched 2.295 million tonnes of sugar out of the 6 million tonnes export quota allotted by the central authorities. Of this, greater than 1 / 4 of the sugar has been dispatched to African nations.
“We now have contracted for the export of 55 lakh tonnes of sugar, of which 22.95 lakh tonnes of sugar has been dispatched,” mentioned AISTA.
