The sugar industry has produced 23.05 million tonne of the staple sweetener between October 1, 2017 and February 28, 2018 as compared to 16.26 million tonne in the corresponding period of last marketing year, a growth of 42%.
Considering that there is reportedly a larger sugar production in the current sugar season as also expected in the next season (2018-19), there is a need to export at least 1.5 million tonne in the current season itself over the next 6-7 months.
This will give extra cash flows to the sugar mills, which in turn, will improve cane price payments to the sugarcane farmers and will reduce the cane price arrears, which is accumulating very fast to uncomfortable levels, said Indian Sugar Mills’ Association (ISMA) in a release on Monday.
The sugar industry has produced 67.88 lakh tonne (6.788 million tonne) of more sugar than last year at the same time i.e. up to February 28, 2017. However, one needs to keep in mind that last year’s sugar production was the lowest in the last 7 to 8 years, when in 2016-17 sugar season, it had fallen from normal production of 250-260 lakh tonne to only 203 lakh tonne. Therefore, the difference as compared to last year seems to be large, but it needs to be remembered that the previous year, was a year after two years of drought in western and southern parts of the country, ISMA said.
Nearly 522 sugar mills across the country were crushing sugarcane in the current season. As on February 28, 479 sugar mills were still working i.e. 43 sugar mills have shut crushing operations in the current season. There are reports that some more sugar mills would be shutting operations in the next couple of weeks. Most of the sugar mills which have closed are from Karnataka, Maharashtra and Tamil Nadu.
On the other hand, the availability of sugarcane is better this year due to abundant rainfall and also that sugar mills in almost all the states across the country started crushing operations much earlier and at full capacity than last year.
Uttar Pradesh has produced 73.95 lakh tonne of sugar whereas Maharashtra recorded an output of 84.24 lakh tonne and Karnataka produced 33.44 lakh tonne till February end. Sugar mills have still not started closing in Uttar Pradesh, but have started shutting their operations in Maharashtra and Karnataka.
As compared to about 246 lakh tonne of sugar sales by mills in 2016-17 season, one can expect the sales to be slightly higher at around 250 lakh tonne in the current season.
During February 2018, there was a substantial improvement in the market sentiments and buying interests, by both the bulk consumers as well as domestic traders.
According to ISMA, one expects an improvement in sugar offtake in February 2018. Therefore, the expectation of sugar sales of around 250 lakh tonne in the whole season seems reasonable. The pipeline between the sugar mills and retail market is reportedly very thin and, therefore, with an improvement in the market sentiments, there is reportedly better buying interest for stocking purpose also.
Thanks to the Centre’s decision to increase import duty on sugar from 50% to 100% and a control on sugar sales by sugar mills in the 2 months of February and March 2018, there was an improvement in sugar prices across the country by over 10%.
However, after the initial increase, sugar prices have seen a marginal correction downwards. Nevertheless, the current sugar prices are prevailing at slightly better levels as compared to what these were at the end of January 2018.