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Prices of sugar fell in key wholesale markets of the country amid increased selling pressure on mills. Prices of medium-grade sugar were down by 5 rupees per 100 kg each in the markets of Delhi and Muzaffar nagar, while they were 10 rupees per 100 kg lower in Mumbai and Kolhapur. Millers quoted lower prices as there was no demand at current price levels and mills have to adhere to stock limits.

Sugarcane crop in South and Central Maharashtra, the key growing regions, has suffered extensive damage due to pest attacks, and yields could dip by 10-15 per cent in the twin regions, causing extensive loss to farmers. Crop damage is extensive because of the white grub pest, which attacks the roots of sugarcane. In South and Central Maharashtra, more than 16.85 per cent and 41.25 per cent area has been affected in 2016-17 due to the pest attack. An average 30 to 35 per cent area is affected, which could result in a 10 to 15 per cent loss in sugarcane yield. In Maharashtra, sugarcane has been planted in about 9.5-lakh hectares for the 2016-17 season, higher than the 6.33-lakh hectares in the previous year.

Pakistan has allowed export of 500,000 tonne of sugar due to surplus stock in the country. Pakistan is estimated to have produced around 6.2 million tonne sugar this season. The country’s consumption is roughly 5 million tonne, leaving a surplus of 1.2 million tonne. For the 2016-17 marketing year ending September, the country has allowed export of 725,000 tonne of sugar till July, though exports have been below the allocated quota due to low prices globally.

After two years of deficit, the global sugar market is likely to post a surplus in 2017-18 (Oct-Sep). The surplus expected had dragged front-month raw sugar contract on Intercontinental Exchange to a 16-month low of 12.53 cents a pound in June. Though prices have since recovered to over 14 cents, they are likely to trade in a narrow range of 12.55-18.20 cents a pound over the next few months. Sugar prices are likely to remain in a range as the global sugar production is seen at a record high this year. International Sugar Organization has pegged global 2017-18 sugar output at a record high of 179.30 million tonne, up 11.5 million tonne from this year, driven largely by production increases in India, Thailand, China and EU. Sugar output in Brazil, the world’s largest sugar producer and exporter, is expected to be only marginally higher at 36.2 million tonne, while that in European Union it may rise to 18.64 million tonne, much higher compared to 15.9 million tonne produced in 2016-17.