Sugar prices fall for first time in a week after Centre’s import move

Retail sugar prices declined on Thursday for the first time in a week, offering some relief to consumers after a sharp surge pushed rates to record levels ahead of the festive season. The all-India average retail price of sugar fell to Rs 64.33 per kg on August 27 from Rs 65.06 per kg a day earlier, according to data from the Department of Consumer Affairs. Prices had climbed rapidly over the previous week, rising from Rs 55.73 per kg on August 20.

The decline comes after the Centre permitted duty-free imports of 10 lakh tonnes of raw sugar to augment domestic supplies. The government has also tightened stockholding norms and stepped up action against suspected hoarding and speculative activity in the market.

Wholesale prices cool

The impact of the measures was initially more pronounced at the mill and wholesale levels. Ex-mill sugar prices, which had climbed sharply in several producing regions, have fallen by around 18 per cent following the government’s intervention.

Prices are currently hovering around Rs 5,500-Rs 5,900 per quintal at the ex-mill level. In Maharashtra’s Kolhapur market, medium-grade sugar prices dropped from around Rs 6,350 per quintal on August 21 to about Rs 5,550 on August 25.

Retail prices generally respond to wholesale movements with a lag, and Thursday’s decline suggests that the correction further up the supply chain has begun reaching consumers.

The government has imposed a stock limit of 400 tonnes on sugar dealers until November 30. From September 1, bulk consumers will also be restricted from holding stocks exceeding 15 days of their consumption requirement. Central and state teams have been conducting physical verification of stocks at mills as part of efforts to discourage artificial scarcity.

Imported raw sugar is also required to be refined and released into the domestic market within a stipulated period, aimed at ensuring that additional supplies reach consumers rather than being accumulated by market participants.

Prices still elevated

Despite Thursday’s decline, sugar remains considerably more expensive than it was before the recent spike. The national average retail price is still around 31 per cent higher than a month ago and nearly 39 per cent above the level prevailing a year earlier.

There are also significant variations across states. Retail prices remain above Rs 70 per kg in some markets, while several major consuming states continue to report rates in the mid-to-high Rs 60 range.

Further relief could emerge as additional supplies enter the market. Around 3-3.5 lakh tonnes of refined sugar currently held by Indian refiners is expected to become available domestically, while the duty-free raw sugar imports are intended to strengthen supplies ahead of the peak festival demand period.

The government has maintained that the recent price surge does not reflect a physical shortage of sugar. It has attributed the increase to a combination of lower production, weather-related damage, seasonal demand and speculative activity.

Authorities have also advised sugar mills and producing states to begin crushing from October 15. An early start could raise sugar production during October substantially and improve supplies during the festive season.

With mill and wholesale prices already retreating, the focus will now be on whether the correction translates into a sustained decline at retail counters in the coming days.