Stocking, speculation behind ‘unnatural’ sugar price surge: ISMA

NEW DELHI: Sugar industry’s apex body ISMA on Monday said that there is no shortage of the sweetener while admitting that the spike in prices is “not natural” and is being fuelled by stocking by bulk consumers and “speculative behaviour”. The industry body said they want “rationalisation” of retail prices and are hopeful of a reduction in the coming days following multiple steps that govt has taken.The industry also dismissed allegations of diversion of sugar for ethanol production as a reason for tight supply of the sweetener and increasing prices. It said only 290 crore litres out of a total 1,200 crore litre of ethanol came from sugar during this ethanol supply year (Oct 2025- Sept 2026). “Only after ensuring availability for domestic consumers and adequate opening stock, allocation for diversion of sugar for ethanol is decided,” ISMA functionaries said.On Monday, the average all-India retail prices of sugar stood at Rs 63 per kg, 29% higher than Rs 48.7 per kilo a month back.Speaking to reporters, ISMA president Niraj Shirgaokar said that the increase is not being driven by any “actual shotfall” in availability. “The largest contributor has been speculative behaviour. A section of traders created a misleading impression of tightness, and in response, large bulk buyers who would normally procure just-in-time began stocking 1.5-2 months of supply in advance. That behaviour pulled sugar out of circulation and into godowns, creating artificial tightness that had nothing to do with actual availability,” he said.ISMA said that prices have risen also due to factors including lower production than estimated, weather conditions and pests that impacted the crop. The association functionaries said that millers got a good ex-mill price, which peaked Rs 58-59 a kg, due to this artificial rise in sugar prices and now it’s declining, which will soon be reflected in the retail market.Shirgaokar projected the closing stock of roughly 35 lakh tonne at the end of Sept calling it “a healthy buffer against normal domestic demand” He added govt’s duty-free import window, tightened stockholding limits, ongoing special crushing, and an early start to the new season would help in augmenting domestic supply and control prices.Asked about govt putting blame on industry for jacking up ex-mill prices, ISMA president said that the industry was not involved in creating any artificial scarcity and increasing rates. However, he did not rule out that some mills might be holding stocks and said the govt is looking into that.Get the latest Business News and Live updates. Download the TOI app.