India sugar prices hit record high level

Indian sugar prices have jumped 10% over the past month to a record high and are expected to remain elevated for at ​least the next three months as supplies tighten and festival demand ‌gathers pace.

Rising prices will add to retail inflation that breached the central bank’s target for the first time in 17 months in June, and ​prompt New Delhi to take further measures to curb prices after banning exports ​and imposing stock limits last month.

The rally is also expected to boost ⁠margins for sugar producers such as Balrampur Chini, Dwarikesh Sugar, Shree Renuka ​Sugars, and Dalmia Bharat Sugar, dealers said.

India’s sugar demand ‌typically ⁠rises from August to November as the country celebrates major festivals such as Ganesh Chaturthi, Dussehra and Diwali, when consumption of traditional sweets and confectionery increases.

Sugar inventories held by mills at the start of the new season on October 1 are expected to ​fall to about 3.5 ​million tonnes, the ⁠lowest level in more than three decades, after production in the current season fell short of annual consumption and mills ​exported about 800,000 tonnes of sugar.

«Supplies will improve only after ​mills begin ⁠crushing the new-season crop in November. Until then, the market will have to rely on this season’s production, which was insufficient», — said a Mumbai-based trader.

Bulk consumers such as ⁠biscuit ​and confectionery makers and soft drink and beverage ​companies are building inventories ahead of the festival season, buying sugar despite elevated prices to avoid shortages ​during the peak demand period, he said.

Tags: prices, sugar, India