Sugar prices are showing signs of cooling after a sharp spike in recent weeks, with ex-mill prices falling around 20% in recent days, according to the government. Retail sugar prices have also started declining and are expected to follow the downward trend at the wholesale level.
The government said the recent price surge was largely driven by hoarding and speculation rather than an actual shortage, stressing that the country has adequate sugar stocks.
The development comes after a nationwide physical verification of sugar stocks at mills. The exercise found that several mills were holding more sugar than they had declared in their monthly returns, reinforcing the government’s assessment that supplies remain comfortable.
The government has also flagged instances of mills selling less sugar than their allocated quota, a practice that can restrict supplies despite sufficient physical stocks.
ALSO READ: Indian Refiners To Divert Sugar To Local Market To Ease Crunch
To ensure sugar moves into the market faster, the government will replace the existing monthly allocation system with a fortnightly quota mechanism from September.
Under the new system, mills will have to sell at least 40% of their allocated quantity in the first week and the remaining amount in the following week.
The move is aimed at giving the government closer visibility into demand and supply, allowing it to respond faster to changing market conditions and release additional quota if required.
Mills have also been directed to dispatch sugar within seven days of sale. The government expects the combination of faster allocation and mandatory dispatch to improve the flow of sugar from mills to dealers and, eventually, consumers.
Bulk consumers have been advised against holding stocks beyond their operational requirements. The government’s measures are also being backed by fresh supplies from the upcoming sugar season.
Sugarcane crushing is expected to begin from October 15, with more than 10 lakh tonnes of sugar production expected in October. Production is projected to rise to around 45 lakh tonnes in November.
Operational mills in Karnataka and Maharashtra are also expected to add around 2 lakh tonnes of sugar to the market in September.
The government has further allowed mills to sell October production without restrictions, helping bring new-season sugar into the domestic market at the earliest.
Refiners have also been permitted to sell converted sugar brought under the Advance Authorisation Scheme, while dealers and bulk consumers holding excess stocks are being encouraged to offload them.
Essential Business Intelligence,
Sharp Market Insights,
Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
