Sugar Prices Increase Amid Festive Demand
Sugar prices have jumped by $0,24 per kg in the past two weeks, mainly due to local demand and preparations for Rakshabandhan and Shri Krishna Janmashtami. Future prices will hinge on government policies and additional quotas. If the government releases more sugar, prices might drop; otherwise, they could keep rising.
Over the past fortnight, sugar prices have gone up by $0,24 per kg, now ranging from $0,462 to $0,485 per kg for mill delivery and $0,504 to $0,516 per kg in the spot market. In Mumbai, less selling has led to a price rise of $0,18 per kg, making prices $0,450 to $0,477 per kg.
Production Estimates Are Influence Market Conditions
Despite the festive season, the government has cut the sugar quota for August to 2.2 million tonnes, 200,000 tonnes less than last month. This reduction has also bumped up truck fares. This season, India is expected to produce about 32 million tonnes of sugar, with consumption around 27 million tonnes.
For a long time, the sugar industry has been asking the government to raise the support price of sugar from $0.372 per kg to $0.504 per kg. Interestingly, the government hasn’t increased the sugar support price since 2019, even though sugarcane prices have gone up several times.
Potential Impact of Government Policy
During the Kharif season, the sugarcane planting area in India has grown from 5.711 million hectares to 5.768 million hectares. However, bad weather in Uttar Pradesh and Maharashtra might affect sugarcane production. The government is thinking about raising the sugar support price in the new season, starting in a month. If sugar prices keep rising, the government might release more quotas to control inflation. Given these factors, big price jumps are unlikely soon. The market will likely move between $0,018 to $0,024 per kg.
Sugar prices have increased due to festive demand and fewer government quotas. Future prices will depend on government actions and weather affecting production. We can expect some price fluctuations, but not major increases, in the near future.