Ram Gopal Yadav

Europe is about to get a lot sweeter. After a decade of quotas, sugar firms in the European Union can now produce and export as much as they want. Companies such as France’s Tereos and Germany’s Suedzucker AG have been ramping up operations to get ready for the change, which will help fuel a global sugar glut. The scrapping of quotas may also lead to major changes in the global sugar trade. With increased EU production, there will be less need to import supplies from places like Africa and the Caribbean. While the industry has been readying for the change for years, it may further pressure prices that have dropped 28 percent in 2017, the worst performance in a Bloomberg index of 22 commodities. In the EU, the sugar-beet harvest is now in full swing and tests are showing higher-than-average yields in France and Germany, the region’s top growers.

Sugar mills in Uttar Pradesh have requested the State government not to increase the prices at which sugarcane is purchased from farmers this year. In a letter written to the Chief Secretary of the State, the U.P. Sugar Mills Association (UPSMA) said that any increase in cane prices would hit them hard “as the cane industry has been going through losses for last three consecutive years. The request comes days after distressed farmers of the State alleged that the present rate of Rs. 305 per quintal of cane was much lower than the total input cost that goes into the farming of cane in U.P. Farmers have waged a campaign to increase the State Advised Price (SAP) to ?400 per quintal. Uttar Pradesh became the highest producer of sugar last year, contributing close to 42% of the total sugar production in India.

Barely three weeks before the 2017-18 sugarcane crushing gets underway in Uttar Pradesh, the country’s largest sugar producer, the state sugar mills, which are predominantly private sector owned, have arrears to tune of Rs 1,130 crore pertaining to the previous 2016-17 season. Of the outstanding amount, the private millers owe the bulk at almost Rs 945 crore, or 84 per cent of the consolidated arrears. The remaining Rs 185 crore is due from the state co-operative federation units. Settlement of arrears within 14 days of sale was a prominent pre-poll promise of the Bharatiya Janata Party (BJP) government in the run up to the UP 2017 Assembly elections. The 2016-17 crushing season had wrapped up by the first week of May 2017. Although five months have passed, yet the arrears have still not been settled in total.

The government has reallocated the raw sugar import quota of 92,000 tonnes surrendered by a dozen South Indian mills and the shipments are expected from mid-October onwards. On September 7, the government had allowed import of 3,00,000 tonnes of raw sugar at a concessional 25 per cent import duty to boost supply in southern India. The import quota was allocated to only southern mills. Otherwise, the import duty on sugar is 50 per cent. Around 41 mills showed interest to import. We allocated the raw sugar import quota of 3 lakh tonnes as per the rule. But 11-12 mills surrendered 92,000 tonnes, saying it is not viable. We have reallocated that quantity now . Global prices of sugar are still comfortable to import and some mills have placed orders and shipments will start arriving from mid-October, he said and added that imports have been allowed to those mills/refiners that have their own capacity to convert raw sugar into refined one.

Sugar prices moved up in futures market today as speculators built up fresh positions, driven by pick up in demand in the spot market. Fresh positions created by participants on the back of pick up in demand in the physical market amid pause in supplies, mainly influenced sugar prices at futures trade.

India’s sugar production will rise to between 28.5 and 30 MMT in 2018/19, said director general of the Indian Sugar Mills Association (ISMA).

Sugar futures higher following 1 MMT delivery.

India govt OKs 10,000 tn sugar export in preferential quota to EU 2017-18.