In line with our last week forecast, domestic sugar prices cooled off on subdued demand at higher price levels. No festive in coming days also weighed on the prices during the week. Fall in global prices also weighed on the domestic prices on Friday. Prices are expected to fall further in coming week on subdued demand amidst start of crushing season in a month.
During the last week prices fell by 0.1-0.3% at major producing centres while at Delhi and Kolkata prices have fallen by 0.8% and 1.3% on w/w basis respectively. Prices at Muzaffarnagar and Kolhapur are continued to quote near 4.5 year high on lesser release of sale quota amidst good festive demand.
Exports are continued to remain in parity but narrowed drastically during the week on sharp fall in global prices. Export parity for raws turned to disparity on higher domestic prices. Sugar rates for exports were traded steady at Rs 33,000 per MT. Export parity for whites narrowed to USD 5 per MT from last week quote of USD 20 per MT.
In line with our last week forecast spread narrowed during the week on more fall in prices at consuming centres than producing centres. Currently spread is at Rs 299 per Qtl between Kolkata and Kolhapur while between Delhi and Kolhapur it is quoting at Rs 129 per Qtl. In coming week spread is expected to narrow further 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.
Domestic Sugar Outlook:
Domestic prices fell marginally during last week and are expected to trade in a weaker note in coming week as well. Subdued demand at higher price levels amidst no festivity in the near term is likely to keep prices under pressure in the coming month.But price may get supported if international market moves up thereby making export attractive without goveerment subsidy .
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