New Delhi (PTI): Sugar prices rallied higher in the spot market on Monday despite the government flooding the market with five lakh tons of the sweetener, but festival season demand appears to have soaked up the surge in supply.
Sugar prices rose by about 3 per cent both at the spot as well as futures market.
The wholesale price jumped to Rs 1,885 per quintal from Rs 1,831 per quintal on August 9. A similar trend was witnessed in the futures market, where August contract hit upper level of 3 per cent.
The August contract at NCDEX counter rose by 3.70 per cent to Rs 1,821 per quintal at 1700 hrs. September contract rose by 3.25 per cent at Rs 1,845 a quintal and October contract by 3.52 per cent at Rs 1,884 per quintal. In a statement issued last Saturday, the Food Ministry said, "In the last few days prices of non-levy sugar in the open market have increased in spite of much higher availability of sugar in the September quarter, compared to last year".
Religare Commodities Analyst Ajitesh Mullick said, "Good buying ahead of festivals like Raksha Bandhan is weighing on prices". The futures prices should take correction in the short term, he said.
Traders attributed increased demand ahead of festival season for the rise in prices in the spot market. The government announced late last week that it would release five lakh tons of sugar for August and September to contain price rise. It has fixed the free sale quota of nine lakh tons for the current month.
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