Sugar prices defy Pawar commitment of lower prices in a week

NEW DELHI: A whole week after wholesale sugar prices dipped marginally in reaction to food minister Sharad Pawar’s assertion last Thursday that the government would ensure that prices for the commodity would come down, the consumer is finding little respite.

Industry watchers, meanwhile, contend that while prices may have already peaked at current prices, it was unlikely that they would come down substantially anytime soon.

Last week, Pawar said, after a prolonged meeting of the Cabinet Committee on Prices (CCP) that he expected sugar retail prices to come down within a week to 10 days of wholesale prices dipping. Wholesale prices have started to come down. It is my experience in all these years that it normally takes about a week to 10 days for this to show up in retail prices.

However, far from moving southward, wholesale prices for the sweetener have remained consistently high over the last 3-4 days. On Friday, opening prices for sugar were higher by Rs 50-100/qtl (100 kgs) at Rs 3950-4150 compared to the previous closing price of Rs 3900-4100 for Sugar Ready (M) in the New Delhi market and Rs 3850-4100 for Sugar Ready (S) compared to the closing price of Rs 3850-4000/qtl.

On Thursday, sugar prices in Mumbais Vashi wholesale market also rose sharply in response to fresh buying from stockists and traders and low supplies from sugar mills. Price for sugar (S-30) went up by Rs 90-110 per quintal to Rs 3830-3920 per quintal compared to Wednesdays closing price of Rs 3740-3810/qtl. The price of medium quality sugar (M-30) also went up sharply by Rs 90-100/qtl to Rs 3,910/3,990 against Rs 3,810/3,900 previously.

Sugar wholesale prices, infact, were the only ones to remain high in a menu of food essentials (arhar, urad, wheat) in both the Chennai and Kolkata wholesale foodgrains market today, moving up to a range of Rs 3950-4240/qtl for differnet qualities.

The markets indicated clearly they t did not have too much faith in sufficient stocks in the pipeline, as indicated by minister Pawar.

Significantly, confusion persists on whether and how much sugar needs to be imported after March to lubricate domestic demand, in addition to imports already contracted. And that could have key bearing on consumer prices for sugar.

There is every possibility that contracted imports will come in well after peak crushing period, as it did last year, leaving mills holding raw sugar, an industyr insider from UP told ET. Last Wednesday, minister Pawar said that around 50 per cent of the 5.6 m tonnes of sugar (mostly raw) contracted for imports into India had already
arrived at the ports and that the rest would arrive by March.

In all, that would bring the total available sugar in the coutnry for this sugar year to 24 million tonnes, a million tonnes above the annual consumption level of 23 mn tonnes.

Other commodity analysts and sector watchers, too, are reluctant to concur with minister Pawar on a marked decline in wholesale or retail prices anytime soon. A Delhi-based commodity analyst told ET Sugar prices have peaked at Rs 49-50/kg retail. But the drop in price will only be marginal at around Rs 42-44/kg then it will stabilise primarily since there is an acute shortage that will continue to impact market sentiment.

Top producer Brazil's decision to cut down ethanol doping after a relatively poor cane harvest caused by heavy rains would also impact global market sentiment on sugar price, he maitnained.

In a recent interview, MD of Shree Renuka Sugars, Narendra Murkumbi, had aired a similar view, pointing out that March sugr futures were quoting high in the global market and that Brazils lower cane harvesting would persistently impact on global sugar prices.