Sugar traders hope for government intervention

Sugar prices plunged to a two-year low of ₹28.40 per kg at mill gates on Monday, prompting traders to express optimism that short-term bottom could be in sight since the government might announce some measures to arrest falling prices and in turn control mounting cane price arrears.
“As prices have fallen ₹6 per kg since the beginning of the crushing season, traders have lost confidence in the market. If the government comes out with some policy measure, it could give a positive signal to the market,” said Rohit Pawar, vice president, Indian Sugar Mills Association (ISMA).

“Now we see some demand from bulk consumers like cold drink and ice cream manufacturers coming in, indicating that the market could be somewhere close to the bottom,” he said.


Sugar mills from Maharashtra, which often resort to panic sales, issued tenders at ₹28.40 per kg on Monday.

However, even at these low rates, the volume of sale could ensure only hand-to-mouth existence for the millers, traders said.

“With sugar prices declining almost every day, traders have been making losses,” said Abhijit Ghorpade, a Maharashtra-based broker.

For bulk buying, traders are not willing to offer even ₹28 per kg, according to people aware of the matter.

They said traders are waiting for some policy announcement from the central government as it is also worried about cane price arrears piling up.

ISMA has requested the government for export of about 10 lakh tonnes of sugar.

Mandatory sugar exports by each sugar mill in the country is another option being explored by the industry and the government.

The industry is optimistic that the government will soon increase the import duty on sugar in order to prevent import of the commodity from Pakistan.