Sugar

Sugar prices are likely to range between Rs 45 and Rs 50 per kg in the retail markets during the festive season as major sugarcane cultivating states, Maharashtra and Uttar Pradesh, start the crushing season only from November 1. At a meeting of the committee of ministers in charge of co-operatives in Maharashtra, it was decided that the state would also join Uttar Pradesh in delaying the start of the crushing season. The Maharashtra government had asked the central government to provide a subsidy of Rs 500 per tonne of sugarcane crushed in the month of October on the grounds that the cane harvested early would have less sucrose content.

Kingsman has scaled down its forecast for sugar production in Brazil largest cane growing Centre-South region by 300,000 tonne to 36.1 million tonne in 2017-18. Production in the region accounts for more than 90% of the country’s sugar output. sugar output would represent a fall of 2.1 million tonne on year, and would be the lowest since the 31.22 million tonne produced in 2015-16. Sugar production in Centre-South Brazil is seen declining in 2018-19 to 34 million tonne due to an ongoing drought. Kingsman also lowered its global sugar surplus forecast for 2017-18 by 1 million tonne to 3.87 million tonne due to damage to the crop from hurricanes in Cuba.

Sugar mills in Maharashtra have decided to start cane crushing operations for the 2017-18 (Oct-Sep) season from Nov 1, putting to rest speculation about an early start to crushing operations. Among other decisions, the state pursue restructuring of 61 billion rupees worth of outstanding loans of 90 cooperative sugar mills with the Centre. The ban on export of sugarcane may have been taken in the wake of sharp fall in output in the neighboring north Karnataka. Also, Maharashtra wants to raise the longevity of crushing season with an intention to raise the output. The state government expects to crush over 65 million tonne of sugarcane to produce 7.3 million tonne sugar in the year starting Oct 1. This year, sugar output was at 4.2 million tonne.

The prices of sugar fell in the key wholesale markets of the country amid increased selling pressure on mills. Millers are quoting lower prices as there is no demand at current price levels despite it being the festival season. Mills also have to adhere to stock limits. Demand for the sweetener has been low since the beginning of the month. There is only hand-to-mouth demand as crushing season is nearing and there is fear of government action in case prices rise.

Dwarikesh Sugar Industries expects a 15 per cent increase in production leading to higher revenues during the forthcoming crushing season. If the weather holds, the plants located in Bijnor and Bareilly (UP) would better the recovery rates. If not, at least sustain similar rates. The firm total and net revenues increased by 70 per cent from ₹306.1 crore and ₹289.7 crore in the first quarter of fiscal 2017 to ₹522 crores and ₹493.6 crore, respectively, in the first quarter of fiscal 2018.

The cash premium for Thailand’s refined sugar surged to a six-year high this week as near-term supply tightness sent buyers in the Asia Pacific region scrambling for cargoes. The rise started in mid-July when more cargoes were shipped to Taiwan with a subsequent increase in flows to China as Taiwan replaced Myanmar as the destination for illegal sugar shipments. A total of 295,067 mt of Thai white sugar were shipped to Taiwan in the three months to August. This compared with 141,738 mt during the same period to Myanmar. But as demand from Taiwan became consistent, it was the near-term supply tightness that further supported the cash premium.

Brazil Center/South (CS) mills might cut sugar production between 500,000 and 1 million tonnes this crop compared with the previously projected 34 million as a result of higher ethanol output.

Prices of sugar fell in the key markets of Maharashtra due to sluggish demand from bulk buyers. Buyers stayed away from the markets due to heavy rainfall in the region, pulling down prices of the sweetener. In the key wholesale markets of north India, however, prices were largely stable due to lacklustre trade. There is only hand-to-mouth demand as crushing season is nearing and there is fear of government action in case prices rise.

The government may allow more sugar imports if required in the country. The Centre had on Sep 7 allowed imports of 300,000 tonne sugar at 25% duty for 60 days to boost domestic supply of the commodity, as stocks are expected to fall to critically low levels. However, Paswan said there is no shortage of sugar seen in domestic markets as of now.

India top sugar producing state Maharashtra begin this year sugarcane crushing season from 1 November. This season Maharashtra estimates a sugarcane yield of 72.2 million tonnes and sugar production of 7.34 million tonnes. The state expects around 170 sugar factories, both in the co-operative and private sectors, to operate in this crushing season.

Sugar millers are now seeking restructuring of loans for a period of 10 years. Heavy rains in the last few days have made it difficult for them to advance the crushing operations. The millers have also sought government guarantee to enable some of the mills to procure loans from banks since several mills are in a bad shape. Several mills in the state owe dues to the tune of Rs 2,600 crore. Nearly 50% of the mills in Maharashtra has the capacity to crush 2,000-2,500 tonne per day. These are making losses to the tune of Rs 10-20 crore. Those with a higher capacity are incurring losses of about Rs 30-40 crore for the season.

Global prices of raw sugar are estimated to fall 24% on year to 13 cents a pound (1 pound = 0.45 kg) in 2017-18 (Oct-Sep) due to higher supplies. Global sugar production is expected to increase 7% on year to a record 190 million tonne, slightly higher than the forecast in June. The output in Brazil, the world’s largest producer, is seen increasing 1% to 40 million tonne in 2017-18, and 47% of the cane crushed is expected to be allocated for sugar production, up from 46% in 2016-17. Sugar production in India is expected to be around 27 million tonne in 2017-18, up 11% on year. Global sugar stocks are seen up 7% at 76 million tonne in 2017-18, as production is seen increasing faster than consumption.

Sugar production in Brazil key Centre South region drop to a three-year low next season as a dearth of replanting takes its toll on cane yields, and with ethanol raising its take of the harvest. Kingsman pegged sugar output in the Centre South, which is responsible for more than 90% of output in the top producing country, at 33.99m tonnes for 2018-19, on an April-to-March basis. Sugar output at that level would represent a fall of 2.1m tonnes year on year, and would be the lowest since the 31.22m tonnes produced in 2015-16. The decline would represent a double whammy of a lower cane crush, seen dropping to a four-year low of 575.0m tonnes, and a lower proportion of cane being processed into sugar rather than ethanol.

Prices of sugar rose in markets in northern India because demand improved at lower prices. Lower offerings from mills also supported prices of the commodity. In Maharashtra, however, prices were remained unchanged amid thin sales.

October raw sugar settled down 0.55 cent, or 3.8 percent, at 14.37 cents per lb, after falling to a two-week low of 13.72. Sell stops were triggered as raw sugar futures crossed below the 40-day moving average at 14.65 cents per lb. Expectations of rain arriving in top-producer Brazil after recent dry weather pressured the market. December white sugar settled down $11.90, or 3.2 percent, at $365.00 per tonne.

Prices of sugar rose in the key wholesale markets of north India as demand increased at lower price levels. Sugar prices have remained low for many days now, so, we witonneessed some rise in demand at lower prices. Prices of the commodity have been falling since the beginning of September on account of increased selling pressure on mills as the government imposed stock limits on them. Prices of the sweetener were, however, largely unchanged in the key wholesale markets of Maharashtra in a lacklustre trade.