Forecast of good monsoon and higher sugar production in the coming season of 2017-18 has pulled down prices of the sweetener by Rs 50-60 per quintal over the last 15-20 days. Over the last couple of months, sugar prices have fallen by at least Rs 110 per quintal, as per industry experts. According to Mukesh Kuvediya, secretary general, Bombay Sugar Merchants Association, prices have fallen because of weak demand and estimations of a good monsoon ahead which is likely to result in a good crop. Higher expected sugar production in the country is bearish for the crop. Significantly, monsoon has arrived early in the country and the annual rainfall is expected to be 98% of the long-term average, according to India Meteorological Department ( IMD). With a higher production expected in the coming season, mills are resorting to heavy selling amid selective offtake by stockists and bulk consumers. Profit-booking is also happening, he said. Prices on Friday for S-30 were Rs 3,830-3,900 and Rs 3,930-3,990 for M-30. Millers are disposing off their stocks in anticipation of a good production and weak demand from stockists and bulk consumers such as soft-drink and ice-cream makers. Kuvediya pointed out that international prices are also weak.
Federation of Co-operative Sugar Factories estimates Indian sugar production will rise 25% year-on-year to 250 lakh tonnes. Higher production is bearish for sugar prices as it is expected to reduce the country’s imports this year. Production this year dropped to barely 200 lakh tonnes while the estimation was for around 240-250 lakh tonnes, Kuvediya pointed out.
With a carry forward of 77 lakh tonnes, some 277 lakh tonnes was available and after consumption of some 240-250 lakh tonnes, some 40-45 lakh tonnes remains as carry forward for the new season, he said, adding that the country’s position is quite comfortable, ruling out the need for imports.
The government had allowed duty-free imports of up to 500,000 tonnes of raw sugar by refineries and mills. The government recently raised the price sugar mills must pay to cane growers in the 2017-18 season by nearly 11%. Significantly, global sugar production is also likely to be a bumper one. USDA has forecast that world sugar production would rise to 1,800 lakh tonnes on account of higher output from Brazil, India, China, European Union and Thailand.
Maharashtra’s sugar output for the 2017-18 season is likely to touch 72 lakh tonnes, according to top officials of Maharashtra State Cooperative Sugar Factories Federation ( MSCSFF). According to the official, around 725 lakh tonnes of cane should be available for crushing for the season of 2017-18 which is likely to result in production of 72 lakh tonnes at an average recovery rate of 11.24%. The Western India Sugar Mills Association earlier had also forecast the output in the state to some 70 lakh tonnes on the grounds that farmers had raised area under cane for the next season because of good rainfall.