Sugar prices are likely to go up after June due to fear of rapid depletion of inventories,a leading economic think-tank has said.
“The sugar prices will start rising again from June 2009 as the rapid depletion of inventories will build tremendous upward pressure on them,” Centre for Monitoring Indian Economy (CMIE) said in its latest report.
CMIE believes that the Government would be able to restrict the price rise for two more months through curb on hoarding and higher free releases of sugar.
The report attributes depletion in inventories to the decline in sugar production for the second consecutive term.
“The sharp fall in sugar production for the second consecutive year is going to lead to a rapid depletion of sugar inventories to historically low levels.”
Sugar production plummeted by 49.6 per cent to 26.1 lakh tonnes in February 2009.
The steep decline aggravated the fall in cumulative production during October-February 2008-09 to 26.1 per cent,CMIE said.
The total sugar production for the year 2007-08 was 263.36 lakh tonnes and for 2006-07 it was 283.28 lakh tonnes.
Overall,the sugar production for October-September 2008-09 would be 160 lakh tonnes,the report said.
“The production of sugar in the country for October-September 2008-09 will be 160 lakh tonnes due to sharp fall in production and number of mills shutting their operations due to unavailability of sugarcane,” it said.
“This implies a year-on-year fall of 39.2 per cent,” the report said.
However,CMIE forecasts production of sugar during October-September 2009-10 to be 225.50 lakh tonnes.