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Government may release 4 lakh tonne more sugar to check price rise in festival season

About 2.66 lakh tonne has already been released over and above the quota of 45 L tonne for the Sept quarter to meet rising demand.

Updated: Aug 08, 2012, 02.09 AM IST

PUNE/NEW DELHI: The government is likely to release an additional quota of 4 lakh tonne sugar to arrest rising retail prices of the sweetener during the ongoing festival season.

The government has already released 2.66 lakh tonne over and above the quota of 45 lakh tonne for the July-September quarter to meet the rising demand.

Wholesale sugar prices increased by Rs 10/kg in the last six weeks while retail prices crossed Rs 40/kg in metros mainly due to drought-like conditions in Maharashtra and Karnataka coupled with lower-than-expected quota for the September quarter.

The additional quota may be sourced from the non-lifted quantity of levy sugar for 2010-11. Levy sugar is the quantity that the government plans to source from private millers for public supply. But of late, the government has not been fully lifting the proposed quantities.

"Around 20 lakh tonne of sugar is blocked in the form of non-lifted levy sugar. If the government decides to release this quantity, it would soften the prices," said an industry official.

There is a downward trend in prices in the last 3-4 days which continued on Tuesday due to profit-booking and the possibility of government allocating extra quota. Ashok Jain, president, Bombay Sugar Merchants' Association, said, "Wholesale prices in Vashi market have declined by about 1.5/kg in the last 4-5 days. If the government announces extra quota, prices may come down further by 1-2/kg."

MCX and NCDEX have increased the initial deposit money on sugar to 10% from Monday. However, traders and sugar mills expect sugar prices to remain firm due to the festival season and the projection of a decline in Maharashtra's sugar production by 20 lakh quintals.

"The current ex-mill sugar price of 35/kg is good for farmers and sugar mills given that the farmers are suffering due to deficient rainfall. Though there is some decline in sugar prices, the prices may remain firm as there is a shortage of sugar cane in Maharashtra," said SM Taware, managing director, Malegaon Sugar Cooperative, Baramati.

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