Sugar mills unlikely to sell entire quota of sweetener

NEW DELHI: Sugar mills may not be able to sell the entire 17.5 lakh tonnes of sweetener allocated to them for this month as the Centre has imposed a restriction on the maximum stock that a trader can keep, a senior industry official said.

In the previous month also, the industry was unable to sell 100,000 tonnes of sugar out of the 16 lakh tonnes of free sale sugar quota. The Centre has asked the mills to dispose the left out stock by April 10. The stock limit order has put restriction on traders, who can���t keep over 2,000 bags of 100 kg each (200 tonnes) with them in a month and therefore the sugar demand is bound to be low, the official added. ���I doubt whether we will be able to sell the quota allotted to us for April,��� he said.

The food ministry has allotted 17.5 lakh tonnes to the mills for open market sale in April, including 100,000 tonnes
of carry-over stock from last month. The Centre also hopes that mills will sell about 200,000 tonnes of sugar this month from the dismantled buffer stocks.

However, industry experts said it is unlikely that mills will be able to offload sugar from buffer stock as demand is not much despite onset of summer when demand usually picks up. But they could not explain the trend of rising prices even though there is higher allocation of non-levy sugar, which are meant for sale in open market.

���The market behaviour is very strange. On one hand mills are unable to sell allotted quantity of sugar within the stipulated period, while on the other, prices are not coming down despite lower demand,��� an official with a leading private sector mill in Noida said. He added that demand could not go up much when prices are moving up, except a normal rise witnessed every summer.

A commodity analyst said prices in both spot and futures markets are on firm trend. He termed Friday���s fall in futures market as temporary since lower production estimates have caused the firmness in prices and that situation has not changed. Indian Sugar Mills Association has estimated the output at 15 million tonnes for 2008-09 season (October-September) against 26 million tonnes last season.