Wholesale sugar prices have touched Rs 37.75/kg, highest since 2017 amid expectation of a fall in output because of deficient rainfall in Maharashtra and Karnataka,
The prices have risen by around 3% from the level two weeks back.
The government is also considering a proposal to impose stock holding limits for wholesalers, prescribing the maximum quantity of sweetener they can keep in order to check any price rise. In 2016, stock limits were imposed for sweetener last.
Sources said ex-mill prices of sugar had increased by Rs 3/kg to Rs 37/38 a kg from Rs 34/35 a kg prevailed a fortnight back.
Sources said that sugar production in the 2023-24 season (Oct-Sept) likely to fall to around 31 million tonne (MT) from 32.5 MT in the current season because of deficit rainfall in key producing states of Maharashtra and Karnataka, according to intial industry assessment. While domestic demand for sugar is around 27.3 MT, more than 4 MT will be supplied for the ethanol production.
The government will release sugar production estimates by the end of this month. As on September 1, overall sugarcane acreage stood at 5.9 million hectares (MH), marginally higher than 5.5 MH in the previous year.
“Increase in ex-mill prices of sugar would start reflecting an increase in retail prices in the next two weeks,” a senior official associated with cooperative sugar milL, told FE.
According to the department of consumer affairs, modal retail prices of sugar were reported at Rs 42/kg on Wednesday, which had been unchanged in the last four months. Six months back, modal retail sugar prices were Rs 40/kg.
Retail inflation for sugar rose by 3.57% in July, 2023 on year while a year ago the price rise was 5.22%.
In the current season, the government has decided not to approve a second tranche of sugar exports beyond 6 MT. This follows inputs received by the food ministry on the crop prospects from the various key sugarcane producing regions.
Indonesia, Bangladesh, United Arab Emirates and Djibouti have a major share in the total sugar exports.
In 2021-22 season, India exported a record 11.2 MT of sugar.
Consulting firm Crisil in its report in July had stated that higher domestic sugar prices and increasing sales of ethanol will help offset the rise in sugarcane cost and lower exports in fiscal 2024, leading to stable operating profitability for integrated sugar mills, or those with sugar, distillery and power cogeneration facilities.