Sugar Tender Prices Drop by ₹500 a Quintal as Retail Rates Reach ₹60 per Kg

Wholesale sugar prices sold through mill tenders witnessed a decline of ₹500 per quintal, even as domestic retail rates climbed to a high of ₹60.26 per kg. While trade participants anticipate that retail counters will reflect the drop in wholesale prices shortly, government officials have characterized the recent consumer price spike as unjustified and detached from market fundamentals.

What Happened

Tender prices for sugar dropped across various mills, marking a ₹500 per quintal decline. Trade sources reported that Maharashtra-based Loknete Baburao Patil Agro Industries Ltd sold 70 tonnes of S-30-grade sugar at ₹5,850 per quintal, offering the same rate to interested buyers. In other tender activity, S-30-grade sugar dropped from ₹6,600 on Friday to ₹6,100 per quintal, while M-30 grade slipped from ₹6,725 to ₹6,225 per quintal.

Despite this drop in tender quotations, consumer-facing costs climbed. Data from the Price Monitoring Division of the Department of Consumer Affairs showed that retail sugar prices increased by more than ₹2 per kg on Saturday, advancing from ₹58.23 on Friday to ₹60.26 per kg.

Key Highlights

• Tender rates fell by ₹500 per quintal, with S-30-grade sugar trading down to ₹5,850–₹6,100 per quintal in mill tenders.
• Retail rates surged to ₹60.26 per kg, having increased by more than 35 per cent since June.
• Food Secretary Sanjeev Chopra termed the price escalation unjustified, noting ex-mill prices climbed rapidly from ₹48 to ₹62 per kg due to speculation and hoarding.
• Ending domestic stocks are estimated at 33 to 35 lakh tonnes, with early crushing beginning around October 15 expected to add another 10 to 12 lakh tonnes.
• The Centre has permitted duty-free import of 1 million tonnes of raw sugar and set a 15-day stock holding limit for bulk consumers effective September 1.
• Total sugar production for the season is expected to reach approximately 306 lakh tonnes, factoring in ethanol diversion, compared to an earlier estimate of 343 lakh tonnes.

Why This Matters

The gap between falling mill tender rates and escalating retail prices has put pressure on household budgets ahead of the festival period. Addressing this development, Food Secretary Sanjeev Chopra stated on a private television channel that the price increase was not supported by market fundamentals, citing ample and adequate domestic availability.

Chopra pointed out that ex-mill prices rose rapidly from ₹48 to ₹62 per kg, calling the shift unacceptable and artificially created by speculation, hoarding, and profiteering. Government assessments project comfortable ending stocks between 33 and 35 lakh tonnes, which, along with an anticipated 10 to 12 lakh tonnes from early crushing, are projected to meet festive demand.

What to Watch Next

Market observers expect retail shelves to begin reflecting the lower tender prices from the start of the week. In addition, regulatory measures will take effect, including a mandate starting September 1 that restricts bulk users consuming over 10 tonnes monthly to a maximum of 15 days of stock. The flow of 1 million tonnes of duty-free raw sugar imports and the start of early crushing around October 15 will also be key factors in domestic supply management.

Frequently Asked Questions

Why did retail sugar prices rise if tender prices dropped?

According to trade sources, retail prices often lag behind wholesale movements, with expectations that the tender price drop will reach retail markets early in the week. Government officials have also attributed the retail surge to speculation, hoarding, and profiteering rather than physical supply shortages.

What steps has the government taken to stabilize prices?

The central government has permitted the duty-free import of 1 million tonnes of raw sugar, banned sugar exports after an initial 8 lakh tonnes were shipped, and instituted a 15-day inventory ceiling for bulk consumers using over 10 tonnes per month beginning September 1.

What is the current outlook for sugar production and reserves?

Sugar output for the season is projected at around 306 lakh tonnes, including ethanol diversion, against an original estimate of 343 lakh tonnes. Ending stocks are projected at 33 to 35 lakh tonnes, supplemented by 10 to 12 lakh tonnes from early crushing starting around mid-October.

Source: The Hindu Business Line