Pune: SugarNSE 0.00 % sales in March have come to a halt across the country. Trade and industry sources indicated that overselling by sugar mills in the previous months in anticipation of an increase in government-set floor price has blocked the pipelines, pulling demand down.
“A lot of sugar was sold at Rs 29/kg as the trade was expecting that the government would increase the minimum selling price to Rs 31/kg. This sugar is still there in the pipeline,” said a top trader from Maharashtra, requesting not to be named.
The central government, which has been setting mill wise monthly sales quota since June 2018 on the demand of the industry, has allocated a quota of 24.5 lakh tonnes for March considering that the monthly consumption in summer months is higher than normal.
Majority of trade sources that ET spoke to confirmed that the sugar mills have been able to sell only about 85 per cent of the sugar quota allocated to them during the past 10 months. Amid damp sales, industry sources from both Uttar Pradesh and Maharashtra have also been accusing each other of selling sugar below the MSP of Rs 31/kg.
Prakash Naiknavare, managing director, National Federation of Cooperative Sugar Factories, confirmed, “Yes, there is still a lot of sugar in the pipeline. But mills can expect the summer demand to kick in after March 15.”
Industry sources said the Centre is likely to take action against millers for selling sugar above their allocated monthly sales quota. Sanjay Khatal, managing director, Maharashtra State Cooperative Sugar Factories Federation, demanded that the central government should collect and make public the monthly sales figures of sugar mills.
“There is huge variation in the sales figures available from different sources. The Centre should make them available on the public platform.” The sugar mills are suspected to have sold sugar over and above the allowed quota in anticipation of the proposed increase in floor price of sugar by the government.