"There is a drop in wholesale prices of sugar.... Retail prices will start falling in 10-15 days," Farm Minister Sharad Pawar told reporters on Monday. He said wholesale sugar prices had fallen to 37-38 rupees (81-82 cents) per kilogramme from 42 rupees.
New York's March raw sugar contract, which hit a 29-year peak at 28.95 cents per lb on January 7, slipped 0.14 cent to settle at 27.62 cents per lb on Friday, but analysts said the market may soon touch a 30-year high. Sugar deficit in India, the world's top consumer, for two consecutive years is a key contributor to the global rally.
N.R. Bhanumurthy, an economist at India's National Institute of Public Finance and Policy, said imports would be costly. "Even at the international level, the demand set prices are going up. So even if you are importing, you are not going to import at a lesser price," he said. India's sugar prices may fall in the short term, but the commodity do not have a big weightage in the price index, Bhanumurthy said.
In the keenly watched wholesale price index, sugar has 3.62 percent of weightage unlike fuel and power, and chemicals, which have 14.23 and 11.93 percent respectively. "In that sense, I do not really see it will have a big impact. It will not bring down inflation in a big way." Pawar also said cold weather in northern India was beneficial for the wheat and rapeseed crops.