Ex-mill sugar prices fall 30 pc after government interventions

Ex-mill sugar prices fell nearly 30 per cent to Rs 47 per kg from a peak of Rs 67 following government interventions. However, lower prices have yet to reach consumers, as retailers continue selling inventories purchased at earlier, higher rates

New Delhi: Ex-mill sugar prices fell nearly 30 per cent to Rs 47 per kg on Monday from a peak of Rs 67 per kg on August 18, following a series of government interventions. However, the decline has yet to filter through to retail shelves, industry sources said.

While the decline in ex-mill prices is reflected almost immediately in wholesale markets, retail prices tend to lag.

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Retailers who bought stock at earlier, higher rates are unwilling to sell at a loss and will continue pricing their existing inventory at the older rates until it is exhausted, the sources explained.

A retailer typically holds 10-15 bags of sugar, each weighing 50 kg. Retail prices will adjust only after fresh stock is procured at the lower rates.

“It takes at least 10 days for changes in the retail price to be reflected,” an industry source said.

On Sunday, retail sugar was selling at Rs 64.23 per kg, compared with a wholesale rate of Rs 59.72 per kg.

Why ex-mill prices fell

The decline follows the government’s decision to allow mills that had refined sugar for export to sell it in the domestic market instead. An estimated 3-3.5 lakh tonnes of this refined sugar is expected to enter the domestic market over the next two months.

Additionally, bulk consumers that had been holding stock for more than 15 days have trimmed their inventories to comply with new government norms. From September 1, bulk users consuming more than 10 tonnes of sugar a month will not be permitted to hold stock for more than 15 days at a stretch.

The monthly quantity sold by each mill to bulk consumers, whether directly or through dealers, will now be verified.

Industry sources noted that a gap of Rs 2-3 per kg between ex-mill and wholesale prices, and Rs 7-8 per kg between ex-mill and retail prices, is fairly typical.

Government’s response

Besides opening up imports, the government has tightened stockholding norms for bulk users and dealers and had earlier banned sugar exports.

The Centre has blamed mills for “jacking up” prices, insisting that the country has ample sugar stocks, even as production estimates for the 2025-26 marketing year (October-September) have been revised down to 306 lakh tonnes from an earlier projection of 343 lakh tonnes.

Annual domestic demand is pegged at around 280-285 lakh tonnes.