Sugar prices in Maharashtra hit new low last seen in March 2016

Sugar prices in Maharashtra have fallen to Rs 29.40 per kg at mill gate, hitting a level last seen in March 2016, at a time when millers are also complaining of sluggish offtake. A section of millers have expressed their inability to pay farmers as per the 70:30 revenue sharing formula and challenged the decision in the court.

“Sugar prices are falling everywhere as mills are under pressure to clear the cane payment bills,” said T Sarita Reddy, former president of Indian Sugar Mills Association.

Millers are resorting to panic selling as they are under stress to make cane payments, Reddy said. Lending banks have reduced valuation of sugar, thereby making lesser amount of advance available for cane payment. Thus the mills that have pledged their sugar with the banks are faced with short margins now, he said.


Maharashtra’s millers had stopped sale for about 10 days in the hope of getting higher prices. However, they started selling again and the prices have been sliding faster, declining about Re 1 per kg in the past one week.

“Sugar prices had already declined Rs 5 per kg till December and will remain under pressure even in January. There are no bulk buyers for sugar, while mills are desperate to sell,” said Abhijit Ghorpade, a sugar broker.

Prices have fallen the most in Marathwada region, touching Rs 29.40 per kg.

Traders said the industry fears continuation of the downward trend in sugar prices unless the government takes some policy measures. “If the situation remains like this and the government does not intervene, it will be very tough to make cane payments,” said Rajendra Girme, chairman, Sasvad Mali Sugar Factory.

Millers are also facing problem of sluggish sales. This is more acute in Maharashtra as Uttar Pradesh, which is on its way to achieve record sugar production, has captured about 80% of Maharashtra’s market in northern and north-eastern India.

According to data released by the Uttar Pradesh government, as of January 16, the state’s sugar production was up 23% over the previous year to 44.48 lakh tonnes of sugar. The cane payment made by UP sugar mills to cane farmers was also up, at Rs 9,237 crore, from Rs 6,519 crore a year ago.

Traders said that stockists will not enter the market until the bottom of the price level becomes clear. “There is no certainty about prices and it looks like they will remain under pressure in future,” said Ashok Jain, president, Bombay Sugar Merchants’ Association.