Sugar Prices Remained Firm in May 2024 Despite Increased Y-O-Y Sales Quota; June Sales Quota Set at 25.50 LMT

The Department of Food and Public Distribution recently announced an increase in the monthly sugar quota for June 2024 to 25.50 lakh metric tonnes (LMT), up from 23.50 LMT in June 2023. This adjustment, aimed at 572 mills, marks a growth of 8.5% year-over-year. The sale quota set by the Central Government behooves national mills to exhaust their produce to sale. This regulation ensures that sugar mills adhere to minimum sales requirements, thus avoiding excess stock that could destabilize market prices and disrupt the agricultural economy.

The decision to raise the quota aligns with current market dynamics where sugar prices have remained firm despite an increase in the previous month's quota. The May 2024 quota was significantly higher at 27 LMT, up 12.5% from May 2023. Despite this increase, sugar prices continued to rise due to a confluence of factors including heightened demand spurred by intense summer season.

Experts believe that the major demand for sugar resonated with the ongoing election waves that amplified the sugar demand. Moreover, the heat waves have further contributed to ramp up the demand for sugar as the consumption of ice creams and sugar-based beverages have seen an uptick. Moreover, the supply side also remained on the lower side on the back of early crushing season.

To address compliance issues, the government has also taken strict measures against some sugar mills. Approximately 63 mills have had their quotas reduced for June 2024 as a penalty for allegedly selling quantities of sugar beyond their permissible limits.