Month: September 2017

The government is likely to soon take a decision on import of sugar to augment domestic supplies, as stocks are expected to fall to critically low levels. Government soon take a decision on the need to import sugar, Food Minister Ram Vilas Paswan posted on microblogging site Twitter. The government had taken an in-principle call to allow import of duty-free sugar, and modalities of import would be finalized soon. The government may be looking at another round of duty-free import also because it doesn’t want prices to rise ahead of the festival season.

Indian Sugar Exim Corp plans to launch a national spot electronic platform for trading in sugar. The platform available to traders, millers, and whoever is interested in buying or selling sugar. Going forward, the platform may integrate with futures and the export-import market. The exchange should provide a transparent platform for spot price discovery.

The National Federation of Cooperative Sugar Factories Ltd has slammed the government efforts to rein in retail prices by imposing stockholding limits. Sugar industry is the only industry where stock limits are imposed on producers. These controls hurt the health and all-round development of the industry. There was no uniform policy on cane price as, unlike other states, the fair and remunerative price in Gujarat is paid in three installments, while Uttar Pradesh has its own mechanism of state advised price.

Import of Pakistan surplus sugar can help alleviate the prevailing supply crunch if the government allows more overseas purchases of the commodity. Even as the demand is set to rise due to upcoming festivals, India, especially the southern states that have seen sugar production dwindle due to drought conditions, has been hit by a supply crunch. Pakistan is likely to have a surplus of at least 300,000 tonne, which can be easily brought quickly into southern ports. Under the current circumstances, there is availability of 0.5 million tonne surplus sugar in Pakistan, which can come to south India.

Futures contracts of sugar traded higher on the NCDEX because of likely rise in demand ahead of the festival season. Reports that mills might not advance the cane crushing this season (Oct-Sep) despite Centre’s request has also supported the sentiment. The most-active October contract traded up 1.4% from the previous close.

Global prices of raw sugar are likely to remain high in the long-term due to low availability of the sweetener. Raw sugar futures on the Intercontinental Exchange are now trading below the ethanol parity, directly reducing the availability of sugar. A fall in prices of sugar incentivises millers to shift to ethanol production. Mills in key cane-producing countries like Brazil have a choice between producing sugar or ethanol. The combined effect of sugar trading below the ethanol parity and increased probability of rainfall (in Brazil) would likely cause the sugar mix to swerve in favor of ethanol.

Prices of sugar fell in the key wholesale markets of Delhi and Kolhapur due to sluggish demand from bulk buyers. While demand is already poor, there is selling pressure on mills due to imposition of stock limit. So, they are quoting lower prices.