Referring to the Indian Sugar Mills Association's estimate of the current season's production, Ranasaria said it would surpass the previous season's production of 129 lakh tonnes by 26 lakh tonnes, to which a carryover stock of 55 lakh tonnes would be added. These add up to a total availability of 210 lakh tonnes of the commodity in the current season, while the expected consumption is about 148 lakh tonnes. Thus, in the normal course, the inventory of sugar at this season's end would be about 62 lakh tonnes.

But this could rise to more than double the quantity of last season's inventory (55 lakh tonnes) if the present offtake pattern continued, Ranasarai said. He added that at present the turnover from indigenous sugar had already hit the bottom as the marketwas flooded with cheaper imported sugar, particularly from Pakistan.

In the Calcutta sugar market, shipments of domestic sugar from the upcountry mills have almost come to a halt as a major portion of the market has been captured by imported sugar and mill agents have stopped booking further consignments from mills in Uttar Pradesh, Bihar and Andhra Pradesh.

According to the figures available from the Calcutta Sugar Merchants' Association, the monthly arrival of domestic sugar was between 20,000 and 24,000 tonnes last year when local markets were not threatened by imported sugar.

However, this year, almost every fortnight ships carrying about 42,000 to 45000 tonnes of sugar from Pakistan, Brazil, Dubai, Sudan and many other sugar producing countries are calling at Calcutta and Haldia ports. As a result arrivals of domestic sugar have dropped below 400 tonnes per month during the past couple of months.

This has led to huge stocks at the mills' end, particularly in Uttar Pradesh, Bihar and AndhraPradesh, from which the local markets used to source their requirements.

This, in turn, provided the importers some leeway to increase their prices, by about Rs 50 to Rs 60 per quintal so far, without inviting domestic sugar back in the market. In late November, ex-Calcutta port price of Pakistan sugar was Rs 1465 per quintal and this rose abruptly to Rs 1530 per quintal at the opening of the current week, said a prominent sugar merchant in Calcutta.

Further, they too indulged in hoarding following indications from the government that import duty might be hiked. In a recent interview with a Star TV correspondent, prime minister Atal Behari Vajpayee confirmed that the government was considering hiking customs duty on sugar so as to make imports non-remunerative. Following this news, importers went on booking more and more sugar consignments at the existing duty and built up a large stock, to be sold later at higher prices, lamented the merchant.

He further said that the government's rhetoric on dutyhike, much before passing an official order, often encouraged hoarding.

The prime minister's announcement on tariff hike also prompted the Indian sugar mills to quote their prices a shade higher than the existing levels, despite the sluggish demand in the market. Balrampur Chini Mills as well as other UP-based sugar mills have hiked their ex-mill price to Rs 1430 per quintal on Monday last from Rs 1,365 per quintal during November-end.