Vivek Saraogi, MD of Balrampur Chini Mills said that sugar prices have corrected to Rs 38/kg post weekly dispatch norms. Recent correction in sugar prices was due to government’s moves. However, he feels that sugar prices will recover in next 1-2 months. Genuine shortages will see sugar prices recover back to previous levels in a 4-6 weeks.

He further said that there is no speculation in sugar, and lack of supply is driving the prices. There is physical mismatch between demand and supply on the ground. Price is factoring in a possible increase in Brazilian output. He expect that 2010 sugar production will be maximum 20 million tonne. Next season too will have a 3 million tonnes supply deficit. He sees sugar prices at around Rs 40/kg for the next 2 years. Average Sugar realizations in this season is seen at about Rs 42-43/kg. The company is not looking at selling any stake, he added.

Government is determined to see cool off in sugar prices. Weekly sale restriction was re-imposed on Tuesday. Millers will now have to sell non-levy quota sugar on weekly basis. Weekly sales & dispatches need to be notified to government within 7 days. A fear of supply pressure is leading to correction in domestic sugar prices. The sugar prices have come down to Rs 37.30. The prices are expected to correct another 70-90 paise.