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Domestic Sugar Prices Steady Amid Marriage Season Demand

24 Jan 2020 7:04 pm
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NEW DELHI (Commoditiescontrol) - Prices of sugar remained steady in most wholesale markets across the country on Friday as demand for the ongoing marriage season offset selling pressure on mills ahead of the month-end.

As per traders, mills are now rushing to liquidate their stocks. The government had fixed the monthly sales quota for January at 22 lakh tonnes. The outlook is slightly bullish due to the optimism over export demand amid surge in the global price.

Global sugar prices are currently at the highest level in two years amid growing expectations of short supply this year due to adverse weather in India and Thailand, two key producers.

Mounting tensions in the Middle East are also contributing to the rally in prices as the prospect of higher oil prices are prodding mills into crushing more sugar cane to make ethanol to meet surging demand for the biofuel.

The price of raw-sugar futures is hovering around the mid-14 cent a pound in New York, up over 30 percent from the trough mid-September and the highest level since January 2018.

India has exported over two million tonnes of sugar in sugar year 2019-20 so far and is expected to export upto five-six million tonnes by the end of the sugar year. The government has allowed upto six million tonnes of export, which attracts Rs 10.5 per kg subsidy.

Meanwhile, banks have disbursed loans to only 36 mills for addition and expansion of distillery capacity for ethanol production.

Only Rs 10 billion have been disbursed of the Rs 61.4 billion soft loan the Centre had approved to help mills boost ethanol output.

As part of an incentive scheme announced in June 2018, the Centre had approved soft loans for mills to set up new distilleries or upgrade existing ones, expand capacity, and encourage them to divert cane to ethanol.

Of the 282 applications the government received for addition and expansion of distillery capacity, 114 were approved in September 2018. Of these, only 55 mills have been sanctioned loans worth about Rs 27 billion.

       
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