Sugar stocks see profit booking amid hike in duty
Bhagyashree Vivarekar / 17 Jun 2016
Sugar stocks surged exceptionally in the previous two weekly sessions in the wake of sugar price hike amid inventory deficit. To check the prices, which are hovering near Rs. 40/kg, government has recently imposed 20 per cent customs duty on sugar exports.
India, the second largest sugar exporter, has exported 1.6 million tonnes of sugar from 2015-16 marketing year; while the retail prices have increased from 30/kg to 40/kg in just six months. The supply deficit from the largest exporter Brazil has aggravated the prices by 50 per cent.
India’s May CPI stood at 5.76 per cent and rose consecutively for the second month as against 5.39 per cent in April. Moreover, food inflation that accounts for nearly 50 per cent of the CPI has increased from 6.32 per cent to 7.55 per cent in May.
The said inflation has been reflected in the other commodities like tomato, wheat and pulses too which have seen a major spurt in prices recently. Thereby to check further hike in sugar prices and to encourage domestic sale at lower prices, government has imposed export duty on raw, white and refined sugar.
Food ministry had earlier proposed a 25 per cent duty on sugar exports amid concerns over competitive rise in global sugar prices.
Going forward government is also expecting a decline of 23-24 per cent in the production of sugar during the marketing year 2017-18. The check in exports would be a bigger relief than the scenario wherein the opening stock of 7 million tonne is seen adding to a total of 30-31 million tonnes during the year.
The stocks of sugar might correct with the news in the coming session depicted by a profit booking in the charts.
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