Those hoping for a respite from deficit-driven high sugar prices in the New Year have a long wait ahead, as tight supplies, high cane prices and expensive imports leave little scope for any substantial price correction.
Restoration in the demand-supply balance and the resultant weakening of prices could be a possibility once cane crushing starts for the new season in October. However, that too hinges on the weather gods playing fair next year.
Sugar prices rose an unprecedented 72% in the Vashi wholesale market in 2009, hitting a record of over Rs 3,500 per 100 kg on Nov 7, and touching Rs 40 a kg in the retail markets, as drought shrunk cane output and sugar supplies.
According to government data, wholesale prices of sugar have risen 64.21% over the past one year.An official with an MNC trading house said retail prices may touch Rs 40 a kg again next year and the level may even be breached during the peak demand season of May-July, as supplies would be barely enough to meet demand despite a large volume of imports.
India produced 14.7 million tonnes of sugar in the season ended September 30 and is expected to produce less than 16 mt in 2009-10, against an annual requirement of about 23 mt.
Comments