News

The Indian Sugar Mills Association has pegged the country sugar output in 2017-18 (Oct-Sep) at 25.1 million tonne, up 23.6% from 20.3 million tonne produced in the previous year. Uttar Pradesh, Maharashtra and Karnataka the three top sugar producing states are expected to produce over 19.8 million tonne of total sugar output during next season.

Prices of sugar fell in the key spot markets as mills lowered their prices to stir demand, owing to fading purchases at higher prices. Stockists have also replenished their stocks in the beginning of the month. Likely higher output in 2017-18 sugar season (Oct-Sep), backed by good monsoon rains has also weighed on the sentiments of sugar. In Delhi, sugar was down 10 rupees from previous close, while in Mumbai, the commodity was sold down 5 rupees. India sugar production is likely to rise 16-20% to around 23.5-24.5 million tonne in 2017-18 (Oct-Sep).

Prices of raw sugar globally are in a free fall for the last three-four months and a further downside is expected by next month. Prices of raw sugar on Intercontinental Exchange fell to a 16-month low of 12.53 cents per pound in the last week of June. Though prices rebounded to 14-cents-per-pound mark earlier this week, the gains were short-lived. In the main centre-south growing region (of Brazil), the proportion of sugarcane that is turned into sugar is set to increase to 48%, following a figure of 46.3% in the last crop year. Prices of the sweetener may slip further mainly due to expectation of bumper global production in the next season.

The cooperation and marketing department of Maharashtra approved subsidy payments for cooperative mills that exported raw sugar in 2014-15 season. The payment of subsidies has been approved to enable mills to clear fair and remunerative prices to sugarcane farmers. The state had provided 100 million rupees for payment of sugar subsidies in the current financial year budget, of which 70%, or 70 million rupees, can be used for export subsidies. The government had declared a subsidy of 1,000 rupees per tonne to encourage export of raw sugar in 2014-15, when the country faced severe supply glut and record low prices of the sweetener.

Prices of sugar were down in the key wholesale markets of Mumbai as demand faded at higher prices. In Delhi, prices were unchanged after rising by 5 rupees per 100 kg on previous close, after the import duty hike, while in Mumbai, the commodity was down 5 rupees.

Futures contracts of raw sugar on the ICE fell over 1% as the import duty on sugar in India was increased to 50% from 40%. The most-active October contract was at 13.37 cents per pound, down 1.4% from the previous close.