Mumbai: Indian spot sugar prices jumped over 4% to a fresh record peak on Thursday buoyed by good retail demand and a delay in announcing non-levy sugar quota for September, traders said.
Depleting stockpile and firmness in overseas markets also bolstered sentiments, they said.
In Kolhapur, a key market in top producer Maharashtra, the price of the most traded S-variety sugar climbed 4.2% to Rs3,021.3 ($61.7) per 100 kg, breaching earlier high of Rs2,965 on 11 August.
Spot price had risen more than a quarter in August, while in 2009 it has jumped more than 64%.
“Prices rose as government delayed announcement of non-levy sugar quota. Millers were not releasing stocks as they were not aware how much they can sell,” said Mukesh Kuvadia, secretary of Bombay Sugar Merchants Association.
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.
In last week of the month, the government usually announces quota for next month, but this month it delayed announcement till Thursday evening.
The country released 1.83 million tonnes of non-levy sugar for September, up 9.6% compared to the previous month as the country is heading towards the peak festive season, the government said in a statement on Thursday.
“Prices may rise by another 4-5% this week. Quota is lower than market expectations. Besides, household demand is robust due to new month’s beginning and festivals,” Kuvadia said.
Wholesale traders stock up on food articles in the last and first week of the month to prepare for purchases by India’s salaried middle class, who buy in the first two weeks of the month after receiving wages.
The country’s peak festival season runs from August to October, when demand for sugar goes up as people consume more sweets and confectioneries.
India’s new sugar season will begin with much lower stocks and production will be hit by lower sugar recovery from cane after the failure of monsoon rains, agriculture minister Sharad Pawar said on Tuesday.
Last week, the head of the National Federation of Cooperative Sugar Factories Ltd, J.B Patel, said India’s opening stocks would be at 2.7 million tonnes, down three quarters from 10 million tonnes on 1 October, 2008.
India has put stock limits for big companies, wholesale traders and retailers to curb the hoarding.