Stock Market Tips|Buying by stockists likely to push up sugar prices

Govt lifts stock limit on traders; may trigger 1.5 mt of fresh purchases to fill inventories

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Sugar prices are likely to rebound in the short term due to fresh buying from stockists, after the lifting of stockholding limits and a gradual decline in distress selling by some mills in Uttar Pradesh and Maharashtra.

The government on Tuesday lifted the stockholding limit on sugar, which had restrained traders from holding beyond 1,000 tonnes (t) in the Northeast and 500 t in the rest of the country. The limit also came with a rider that traders would have to sell their stocks within 30 days. Now, traders and stockists can buy and store any amount of sugar. The restriction had drained the inventory pipeline.

Experts, however, said around 1.5 million tonnes (mt) of fresh purchases would come into the system following the lifting of the cap. “Lifting of stockholding limit was delayed due to elections in Gujarat and Himachal Pradesh,” said Praful Vithalani, chairman, All India Sugar Traders Association. “Following the election result, the government immediately removed the stockholding limit. Now, traders, stockists, and bulk consumers can store as much as they want. This would immediately stop the fall in sugar prices and the prices would start rising in the first quarter of next year.”