Sugar gets costlier both in spot and futures mkt

NEW DELHI: Discounting the Centre's decision to release an additional five lakh tons of sugar for open market sale, sugar futures on Monday hit the upper circuit of three per cent on the NCDEX counter.

Sugar firmed up in the spot market as well, where prices rose by Rs 38 at Rs 1869.25 per quintal.

In the futures market, the August contract at the NCDEX rose by 3.70 per cent at Rs 1,821 per quintal at 1700 hrs. September contract rose by 3.25 per cent at Rs 1,845 per quitnal and October contract by 3.52 per cent at Rs 1,884 per quintal.

"Good buying ahead of festivals like Raksha Bandhan is weighing on prices," Religare Commodities Analyst Ajitesh Mullick revealed.

He said the futures prices should take correction in the short term.

However, another analyst said that the governments move to defer sugar decontrol may further push up prices in the coming days.

Traders attributed increased demand ahead of festival season for the rise in prices in the spot market.
The government announced yesterday that it would release five lakh tons of sugar for August-September period to contain price rise. It has fixed the free sale quota of nine lakh tons for the current month.

For the ensuing 2008-09 sugar season, the government estimates production at 220 lakh tonnes, with a possibility of five to seven per cent increase if the weather condition remains favourable.

According to the estimates, the closing stock at the end of current 2007-08 sugar season would be 110 lakh tonnes, taking the total availability in 2008-09 season at 330 lakh tonnes. Sugar season runs from October to September.