Private traders: Tobacco procurement price of STC

As STC’s tobacco procurement price has failed to enthuse private traders into participating in Andhra’s auction platforms, and the Union government may  introducing a price band in consultation with tobacco companies.

STC’s current procurement price would function as the upper limit, as no buyer is willing to pay more, while the minimum prices, would be fixed only after receiving suggestions from local traders, as reported.

The prices at which STC is currently procuring tobacco in all five regions have proved to be too high for most local traders, leaving only some 30-odd bigger companies in the market.

Industry sources reported as lowest level in the price band is unlikely to be higher than the minimum guaranteed price (MGP) of Rs.30-32/kg announced by the trade for this year, global surplus of tobacco, which leads to a general sliding of prices.

The prices of tobacco from Zimbabwe and Brazil are down as well.  So unlike previous years, it would be impossible for Indian traders to pay more than MGP. For instance, Egyptian tobacco is available in the world market for $1.5/kg., which translates into Rs.29/kg for the higher grades.

“In such a situation, no Indian trader would be willing to buy at the current STC procurement prices of Rs.41.60/kg in Guntur and Rs.63/kg in the northern light soil region,”.


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