Mumbai: Indian spot sugar extended the previous session’s losses on Friday as millers lowered prices in an attempt to sell allocated quantity for the fortnight and generate cash to pay farmers’ dues, dealers said.
“Weak demand is forcing millers to lower the prices,” said a member of the Bombay Sugar Merchants Association. “They want to sell non-levy quota anyhow. They need money.”
Indian mills usually pay farmers a large chunk of the cane price immediately after or within a fortnight of harvesting. Non-levy, or free-sale sugar, is sold by millers in the open market, but the quantity each mill can sell is fixed by the federal government on a monthly basis.
India has partially relaxed norms for millers to sell non-levy sugar quota for April by asking them to sell nearly half of the monthly quota in each fortnight, the government said in an order late on Tuesday.
In Kolhapur, a key market in top sugar producer Maharashtra, the price of the most traded S-variety sugar dropped 1.24 % to Rs2,750 ($62) per 100 kg.
The price has fallen over 30% since a record high of Rs3,972.3 on 7 January.
“Weakness in overseas market and an upward revision in domestic production estimate also depressed sentiment”, the member said.
New York’s May raw sugar contract fell 0.24% to finish at 15.92% per lb on Thursday.
India is likely to produce 18.0-18.5 million tonne of sugar this year, a leading industry body said, raising the forecast by 7-10%.
Demand for the sweetener typically goes up in the summer months from ice-cream and cool-drink makers.