Sugar Mill Gate Prices Decline While All-India Retail Rates Reach New High

Mill gate prices of sugar saw a downward trend on Tuesday, even as the all-India average retail rates climbed to a new high of ₹63.97 per kg, according to data from the Price Monitoring Division of the Department of Consumer Affairs. This compares to an all-India average retail high of ₹63.05 recorded on Monday.

Ex-mill or mill gate prices for S-grade sugar opened lower on Tuesday between ₹5,400 and ₹5,500 a quintal, down from ₹5,500–5,700 on Monday. By the end of the day, rates slipped further to ₹5,200–5,260. Similarly, M-grade sugar rates dipped to ₹5,410–5,600, compared to ₹5,700–6,100 on Monday. An industry source noted that there were few buyers even at these reduced rates.

Wholesale prices across cities also dropped by ₹300 a quintal on Tuesday. Retail prices in major metropolitan areas declined, with rates in Chennai slipping to ₹67 per kg, while Mumbai and Delhi saw rates drop by ₹2 to ₹3 to reach ₹62 per kg.

Industry sources indicate that retail prices in non-sugar producing states are currently high, but expect them to drop below ₹60 per kg in the coming days as the lower ex-mill prices filter down to consumers.

The recent downward pressure on prices has been primarily driven by the government's decision to permit duty-free imports of 1 million tonnes of raw sugar. Additional government measures have also contributed, including crackdowns on traders across different states to prevent hoarding, monitoring of physical mill stocks, and a reduction in stock limits for bulk buyers—defined as those purchasing over 10 tonnes a month—to 15 days of their operational requirements.

Globally, sugar prices presented a mixed picture on Tuesday. October raw sugar futures on the InterContinental Exchange in New York rose to 17.44 cents a pound, with spot prices at 17.66 cents. Meanwhile, white sugar in London decreased to $525.50 a tonne from $534.80.

According to industry sources, the abnormal surge in sugar prices initially began when a mill in Karnataka set an ex-mill rate of ₹6,000 a quintal, prompting other mills within and outside the state to follow suit. Certain traders reportedly built up stocks to capitalize on the rising market conditions. A southern-based sugar trader, speaking anonymously due to the sensitivity of the matter, questioned why mills exceeding allocated quotas or withholding stocks had not been investigated, adding that tightening supplies forced traders to pay higher prices.

"The divergence between falling mill gate prices and rising retail rates highlights a temporary transmission lag in the supply chain. When government interventions such as duty-free imports and stricter stock limits are introduced, wholesale and ex-mill markets react quickly. However, retail markets typically take a few days to adjust as existing high-cost inventories clear out. Businesses and retail traders operating in agricultural commodities must closely monitor policy shifts and inventory regulations to manage margin volatility during sudden market corrections." — Dr. Shishir Gupta, Founder & CEO, StartupLanes