Delay in cane crushing sweetens sugar

West Bengal, Madhya Pradesh & Rajasthan Look To Maharashtra Due To Higher Prices In UP

THE delay in sugarcane crushing in Uttar Pradesh has driven states like West Bengal, Madhya Pradesh and Rajasthan to turn to Maharashtra to meet the demand. This has pushed up the spot price of sugar in Maharashtra. In the futures market, there has been a rise in the open interest — the outstanding buy and sell positions — of the most active contract.
    A higher state advised price (SAP) in UP has lowered demand from millers, who have moved the court against the state government. Millers feel that the SAP is very high and the state government has fixed it arbitrarily without taking into account the losses they suffered in the past couple of years when prices crashed due to good production. The Allahabad High Court is likely to hear the matter on Thursday.
    Meanwhile, crushing is on in Maharashtra. Of the 173 mills, 22 mills till Tuesday crushed 500,000 tonnes of cane, producing 50,000 tonne of sugar at 9% recovery. The state is likely to produce around 60 lakh tonnes of sugar this year, at an estimated recovery rate of 12%.
    "Good demand from Maharashtra is coming from several states including the eastern states that buy sugar from Uttar Pradesh and this has firmed up the ex-mill price in the state," said Maharashtra State Co-operative Sugar Factories Federation MD Prakash Naiknavare,
    The ex-mill sugar price (S-30) which excludes excise duty, is up Rs 25-30 at Rs 1,620-Rs 1,625 per quintal since last week. The price of medium sugar (M-30) hovers between Rs 1,650 and Rs 1,655 per quintal. Mr Naiknavare feels prices can further increase by Rs 25 this month, touching Rs 1,675 in December.
    Sugar prices are also up on the futures exchanges, with price of Sugar M200 December contract on NCDEX up by almost 5% to Rs 1,849 per quintal on Wednesday as against Rs 1,763 on October 29. During the same period, volumes of the same contract moved up to 26,000 tonne from 5,780 tonne. Amol Tilak of Kotak Commodity Services said that the price will further increase due to delayed crushing, retail demand and overall low production. "December contract should touch Rs 1,866 levels by next week," he said.
    nidhi.sharma1@timesgroup.com