Both prices and volume of sugar on the NCEDX market over the last few days have seen a high, but it has done little to change the fortunes of sugar mills in Maharashtra.
Millers say the majority of trading that has pushed the prices of the commodity up is due to activity of traders who are now offloading the stock which they had purchased at lower prices earlier this year.
On Wednesday, future price of Sugar for March 2016 trading at the NCDEX market closed at Rs 3,150 per tonne. Similarly, future prices for May and July 2016 closed at Rs 3,226 and 3,300 per tonne.
It might be recalled that sugar prices in the market has been fluctuating with July prices having gone down to Rs 1,900 per tonne. Over the last few months, sugar price has been speculative with prices coming up in the last few months.
Volume-wise, December saw trading of over 8 lakh tonnes of sugar valued at Rs 2422.21 crore. Sugar trading on NCDEX platform has been steadily increasing over the last few months. November saw trading of more than 5 lakh tonnes of sugar worth over Rs 1,525 crore while in October, around 7 lakh tonnes of sugar was traded valued at Rs 1,933.72 crore. Since July last year, the NCDEX exchange has seen trading of 35 lakh tonnes of sugar with valuation of Rs 9,318.41 crore.
While the sugar market remains bullish, millers say it has failed to affect them in any manner.
Last season, Maharashtra saw a record production of sugar at 105.06 lakh tonnes. This season, it is expected the sugar production of the state would touch 85 lakh tonnes due to drought and other factors.
Failure of millers to pay the sugar cane growers the fair and remunerative price (FRP) meant the present crushing season started with cane arrears of over Rs 1,000 crore.
Although the crushing season of 2015-16 has started with full force, as many as 51 mills have been issued notices by the sugar commissioner to clear dues of over Rs 300 crore, failing which their crushing licenses would be cancelled.
The state produces 37 per cent of the total sugar produced in the country.
Shivajirao Nagawade, chairman of the Maharashtra State Cooperative Sugar Factories Federation, said the trading over the last few months have been dominated by traders. “Taking advantage of the lower prices in July-August, traders had purchased the commodity and they are playing up the market now,” he said.
In most cases, he said, the sugar being traded was still in the mill godowns. “The higher prices have failed to affect the mills. There is no lifting of sugar in the market,” he said.
Tenders floated by mills, he said, hardly had any takers as of now. “All the trading happening now is speculative and it is making its effect on the market,” he said.
On an average, Maharashtra witnesses trading of around 6-7 lakh tonnes of sugar which has remained unchanged.
Similarly, Madan Bhosale, chairman of the Satara-based KisanVeer Cooperative Sugar Factory, said the present trading is of the previous season with traders playing with the sentiments of the market.
“There is no mechanism to control such speculative trading in the markets,” he said.
It might be recalled speculative activities in case of pulses had also caused an artificial price rise in the market this year. Yogesh Pande, spokesperson of the Swambhimani Shetkari Sanghatana, said speculative activities in the market were controlled by just a handful of traders on the commodity exchanges. “Sugar will rise the pulse rate of the government in coming days if there is no intervention,” he said.