MUMBAI (Commoditiescontrol) - In line with our last week forecast, domestic sugar prices rallied sharply after a release of sale quota below market expectations amidst festive demand. However, prices fell on Friday after subdued demand at higher price levels and ample supply. Fall in global prices also weighed on the domestic prices on Friday.
During the last week, prices rose sharply by 3.4-3.0% at major producing centres while at Delhi and Kolkata prices have improved by 4.6% and 3.9% on w/w basis respectively. Prices at Muzaffarnagar and Kolhapur are trading at 4.5 years high on the lesser release of sale quota amidst good festive demand.
Exports continued to trade at parity on higher global prices. However, during the week parity narrowed on fall in global prices and an increase in the domestic quotes. Sugar rates for exports were traded at Rs 33,000 per MT versus 32,000-32,500 per MT quote of last week. Export parity has helped to contract more sugar for Oct/Dec shipment as well Jan/Mar shipment. As per the market sources around 1.5 – 1.7 MMT is already contracted and is likely to contract more in the coming weeks.
In line with our last week forecast spread widened during the week on a sharp rise in prices at consuming centres than producing centres. Currently spread is at Rs 338 per Qtl between Kolkata and Kolhapur while between Delhi and Kolhapur it is quoting at Rs 149 per Qtl. In the coming week spread is expected to narrow as prices at consuming centres are expected to cool off sharply as compared to producing centres. Demand destruction at higher price levels will also aid to narrow the spread.
Govt fixes the domestic sale quota 22 lakh tons against 21 lakh tons of last month and same as previous year
Domestic Sugar Outlook:
Domestic prices are expected to trade in a weaker note in the coming week after a sharp rally in prices in last 3 to 4 weeks. Moreover, the start of crushing season amidst subdued demand due to a sudden price rise is likely to weigh on the prices in the near term.
MUMBAI (Commoditiescontrol) -
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