News

Prices of sugar continued to fall in the key wholesale markets of north India due to sluggish demand from bulk buyers. Most importantly, there is no demand. Also, production of sugar in Uttar Pradesh is expected to be higher next year. Sugar output in Uttar Pradesh is likely to rise to a record 10.3 million tonne in the next season starting October from 8.8 million tonne year ago. In the key wholesale markets of Maharashtra, sugar prices were largely unchanged amid lacklustre trade.

The government decision to allow import of 300,000 tonne of sugar at a concessional duty of 25% is unlikely to have any significant negative impact on prices of the sweetener in the near term, as the quantum of import permitted is very small. Including the 300,000 tonne of imported sugar, the closing stocks for current season are estimated to be around 4.7 million tonne, which would just be sufficient to meet the requirement of around two months of domestic consumption. The expected carryover stock for 2017-18 was lower than the normative stock level of three months–around 6 million tonne–and last year’s closing stock of 7.8 million tonne. The move to allow imports might also benefit the sugar mills based in west and south India, which are currently under profitability pressure due to low availability of cane.

Output of most kharif crops, barring cotton and sugarcane, is seen declining due to dry spell during Jul-Aug. In the Jun-Sep monsoon season so far, Karnataka has received 644.1 mm of rainfall, 10% below normal. Sugarcane production is seen up at 30.4 million tonne, compared with 23.5 million tonne last year.

Global prices have fallen over a quarter so far in 2017 to around $378 a tonne as output is expected to climb in key producers like India, China and Thailand. Sugar cane is a popular crop in the country as the government sets procurement prices, while the industry is protected by a 40 per cent import tariff which has led to high domestic prices. The country last had an export subsidy in 2015/16, set at 13,000 rupees ($124) per tonne for exports of 650,000 tonnes of the sweetener, and a similar subsidy level is needed again. The country produced 7 million tonnes of sugar in the 2016/17 marketing year ending September 30, exceeding local demand of around 5 million tonnes, and the association pegs this year’s crop at a record 8 million tonnes. Industry urges govt to allow export of 2m tons of sugar.

Mauritius cut its 2017 sugar production forecast by 2.7 percent, blaming above average rainfall for a poor harvest. It now expects sugar production of 350,000 tonnes this year, down from a previous forecast of 360,000 tonnes. Rainfall in the month of May was well above average representing 272 percent of the long-term average while the island received only 90 percent of the normal sunshine. Mauritius produced 386,277 tonnes of sugar in 2016. Sugar contributes about 1 percent of the Indian Ocean island’s $13 billion gross domestic product.