Sugar Prices Seen Up On Additional Exports.

As a fallout of the union government's decision to allow additional 500,000 tonnes of sugar exports in the current season sugar prices are seen heading northwards.

The sugar cooperative societies in Gujarat expect the prices of sweetener to rise by Rs 50 per quintal from aroundRs 2,600 per quintal to Rs 2,650 per quintal in the next few days.

According to market participants, the decision of 500,000 tonnes of sugar exports in the current season would stabilise prices from sinking further.

"Country's sugar production is estimated at around 24 million tonnes in the current season. Considering the bumper production this year, the prices have been ruling low. The Centre's move to allow additional 500,000 tonnes of sugar exports will give support to the falling prices. We see prices rising by around Rs 50 per quintal in next few days," said Mansinh Patel, president, Federation of Gujarat State Cooperative Sugar Factories (FGSCSF).

The international sugar prices are hovering higher than the domestic prices.

While domestic prices are pegged in the range of Rs 2,500-2,600 per quintal, the international prices are calculated in Indian currency at around Rs 2,800 per quintal giving a premium of around Rs 200 per quintal.

The price rise in domestic market is believed to boost farmers' sentiment for sugarcane cultivation.

"The sugar prices had touched a bottom of Rs 2,400 per quintal as exports were capped till now. Lower prices would result in reduced realisation for farmers. This would make them shift to another crop. So it was necessary to keep farmers stay interested in cane farming. The realisation may be around Rs 2,500 per quintal in the current season," said Dilip Bhatka, chairman, Madhi Sugar Cooperative Society.

Earlier, farmers' realisation was feared to be as low as Rs 1,900 to Rs 2,200 per tonne of sugarcane against Rs 2,400 to Rs 2,500 per tonne given last year. The sugar acreage in the state has remained stable at around 200,000 hectares, with nearly 300,000 farmers associated with it.

Meanwhile, the industry is still demanding more exports of sugar. "After allowing exports of 500,000 tonnes of sugar, the total export permit so far has reached to one million tonnes. But we have demanded for a total sugar exports of two million tonnes by the end of the current season. This will not affect the availability in the domestic market," said Patel.

Against the total estimated sugar production of about 24.4 million tonnes for the year 2010-11 (October-September) the domestic demand is believed to be around 22-22.5 million tonnes.

Source : sify.com