India sugar prices reach record highs due to shortages and festival demand
Indian sugar prices are expected to stay high for the next three to four months as supplies tighten up and demand increases during the festival season, according to traders and industry officials.
Retail inflation will rise, adding to the retail inflation which breached central bank target for the 1st time in 17 month in June. This will prompt New Delhi to further take measures to curb the prices after banning the exports and imposing a stock limit last?month.
Dealers said that the rally will also boost margins for sugar manufacturers such as Balrampur, Dwarikesh Sugar, Shree Renuka Sugars, and Dalmia Bharat Sugar.
Wholesale sugar prices have increased by nearly 10.2% in Kolhapur - a major trading hub located in Maharashtra's western state - over the last month, reaching a new record of 4,716 Indian Rupees per 100kg.
Ashok Jain is the president of the Bombay Sugar Merchants Association. He said that the demand for sugar has increased a little ahead of festival season, but the mills are holding off on supplies and slowly releasing their stocks, anticipating a further rise in prices.
India's sugar consumption typically increases from August to November, as the country celebrates festivals like Ganesh Chaturthi and Dussehra, during which it consumes more traditional sweets and confectionery.
After mills sold about 800,000 tonnes of sugar and production fell short of consumption, mill inventories are expected to drop to around 3.5 million tons at the beginning of the new season, on October 1. This is the lowest level for more than 30 years.
"Supplies?will?improve only when mills start crushing the new-season crop?in November. The market will be forced to rely until then on the insufficient production of this season, said a Mumbai-based trader.
He said that bulk consumers, such as soft drink and beverage producers, biscuit and confectionery manufacturers, and soft drink and candy makers, are building up their inventories in anticipation of the festival season. They buy sugar at high prices to avoid shortages when demand is highest, he added. (Reporting and editing by Leroy Leo; Rajendra Jadhav)
(source: Reuters)
