India Ex-Mill Sugar Prices Drop 20%

India's ex-mill sugar prices have dropped by around 20 per cent, and retail prices are also starting to fall as supplies improve, according to the Ministry of Consumer Affairs, Food and Public Distribution.

The government has been monitoring sugar prices, stocks, and movement across the country after the recent spike in rates. A nationwide physical verification of stocks at sugar mills showed that there is adequate availability of sugar.

In fact, some mills were found to be holding more sugar than they had declared in their monthly returns. The government believes that there was no shortage that would warrant panic buying or excessive stocking.

The government has also detected instances of 'short selling', where mills sold less sugar than allocated under their monthly quotas. Delays in dispatching sugar sold earlier in the month were also found to be restricting supplies.

To improve availability, the government will introduce fortnightly sugar allocations from September, replacing monthly quotas. Mills will have to sell at least 40 per cent of their allocation in the first week and the remainder in the following week.

Sugar sold must also be dispatched within seven days. Bulk consumers have been advised against holding stocks beyond operational requirements.

The new season sugarcane crushing will begin from October 15, with production expected to exceed 10 lakh metric tonnes during October. November output is projected at around 45 lakh metric tonnes, providing substantial additional supplies for domestic consumption.

Mills can also sell October production without restrictions. The government expects the reduction in wholesale prices to gradually reach consumers as lower rates move through the supply chain.

The Ministry of Consumer Affairs, Food and Public Distribution said that the findings suggested that the price spike was not due to a shortage, but rather due to the actions of sugar mills.

The government has blamed sugar mills for the price spike, saying that ethanol diversion is not responsible. The Cooperative Mills Federation has urged the government to support farmers by raising minimum selling prices.

India's sugar production has surged by 28.33 per cent, and the new season production is expected to provide substantial additional supplies for domestic consumption.

The reduction in sugar prices is expected to provide relief to consumers, who had been facing high prices due to the recent spike. The government's efforts to improve availability and reduce prices are expected to have a positive impact on the market.

The introduction of fortnightly sugar allocations and the advice to bulk consumers to not hold stocks beyond operational requirements are expected to help stabilize the market and prevent price fluctuations.

Overall, the drop in ex-mill sugar prices and the expected increase in production are positive developments for the sugar industry and consumers in India.