The zoom in domestic sugar prices started with the announcement made by the farm minister on lower production estimates for 2007-08, followed by the High court’s exemption to U.P. mills from paying the Rs 110 per quintal interim price fixed by the Lucknow Bench of the same court for cane bought during the current 2007-08 season (October-September). The mills would, therefore now be required to pay only the statutory minimum price of Rs 85-90 per quintal fixed by the Centre for the 2007-08 season. Though the same has been altered later as Supreme Court has put a stay on HC’s order which means that the Mills may for now have no option but to pay the SAP of Rs 125-130 per quintal fixed for the 2007-08 season as well. Besides, there are news that Indian sugar exports are getting delayed due to a shortage of trucks and rail wagons for transportation to ports, resulting from a surge in exports of various commodities. This is the time which Indian exporters of sugar had been waiting for past couple of months where international prices are touching multiple months’ record high and if the above situation continues to persist will hamper down the positive sentiment.
International sugar prices kept zooming to multiple months’ record high throughout the past trading week to end with a sharp correction on the last trading day. Nybot raw sugar March contract fell 0.46 cent or by 3.6 percent to end at 11.99 cents per lb, dealing from 11.88 to 12.95 cents. On Liffe white sugar March contract rose to $10.00 to a peak of $361.00 per tonne, the highest level for the front month since December 2006, but ended $6.00 lower at $345.00. Indian Ncdex sugar futures continued trading on the bull side. In Spot at Vashi mandi both Sugar M and Sugar S prices opened the week in the range of Rs.1450-1540 p.q. and Rs.1400-1436 p.q. Surge in local buying led to a upside rally in spot prices also and both Sugar M and Sugar S closed in the range of Rs. 1456-1540 p.q. and Rs.1400-1471 p.q.
Taking into consideration the Bull Run in sugar prices across the globe got strengthened even more on the news of lower Indian sugar output for 2007-08 which had been weighting heavily on the international markets for quiet some time now. India is likely to produce 26 million tonnes of sugar in the year to September 2008, nearly 12 percent less than earlier forecasts due to lower yield from sugarcane. A record sugar output of 28.4 million tonnes last year sent prices
into a freefall. Mills swamped with a glut and were hit by a long spell of low prices and also tried to export the sweetener at zero profit to trim domestic stocks. Heavy rains in the western state of Maharashtra and a dispute over prices paid to cane farmers in the northern state of Uttar Pradesh resulted into delayed crushing.
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