Sugar

Chief Minister Manohar Lal Khattar announced a hike of Rs 10 per quintal, from Rs 320 to Rs 330, in the state advisory price (SAP) of sugarcane. This benefit farmers to the tune of Rs 86 crore.

Raw sugar futures fell as speculative selling emerged against a backdrop of a weaker Brazilian currency, while a weaker British pound boosted London cocoa prices. March raw sugar was down 0.10 cent, or 0.7 percent, at 14.08 cents per lb, reversing earlier gains as the Brazilian real resumed its downtrend.

Sugar prices are likely to decline by five per cent with the arrival of new-season output. Crushing of new-season cane is scheduled to begin this week, with dozens of mills in Uttar Pradesh starting the procuring from farmers. The first of this sugar is scheduled to hit the market by the end of this month. The carryover stock of cane for the new sugar year (it began on October 1) is about four million tonnes. The market expects a rise in sugar output of 24 per cent this year.

The government has extended the stockholding limit on sugar traders for six more months till Apr 28 to keep prices in check. The stock and turnover limits on sugar were to lapse on Oct 28. In August, the government had also imposed stock holding limits on sugar mills for September and October to ensure mills liquidate excess stock and prices remain in check in a year of tight supplies. India’s sugar output fell to a seven-year low of 20.3 million metric tonne in the year ended September.

Prices of sugar fell in the key wholesale markets of Maharashtra due to increased selling pressure on mills. Cane crushing season is about to begin, so, mills have to pay farmers for the sugarcane they buy so, have selling pressure right now.

Delta Sugars Limited (DSL) is all set to down the shutters from the coming cane crushing season that begins in early December, leaving above 2,000 farmers and 350 workers to their fate. The factory management has announced last week that it had decided to shut the factory, owing to above ₹120 crores of loss in the present fiscal.

Sugar mills in up have delayed cane crushing as they are sitting on large stock of molasses. At the beginning of the month, mills were carrying around 10 million litre molasses stock with them posing a problem of storage as the new crushing season result in more addition to the existing inventory.

Brazilian mills increased the amount of cane used for ethanol production in the first half of October, and reduced sugar output, taking advantage of better pricing for the biofuel as sugar prices remain weak. Mills in the center-south region, increased the amount of cane they used to produce ethanol to 56 percent in the first half of this month from 53 percent late in September and compared with 50 percent early in October last year. Sugar production of 1.97 million tonnes in the first half of October was 12.2 percent lower than in the same period a year earlier, while ethanol output of 1.57 billion liters was 11.6 percent up.

Prices of sugar fell in the key wholesale markets of northern India because various mills in the region have started cane crushing operations, which weighed on market sentiment. Demand for sugar is also low and has kept prices under pressure.

The sugar industry fears pressure on capacity utilisation even as the country’s largest sugar-producing states

The ICE has reduced the maintenance margin requirement for sugar 11 contract by $168. For member, customer omnibus and hedge accounts, initial and maintenance margin requirements are $952, respectively. For all other customer accounts, the initial margin requirement is $1,064, while the maintenance margin required is $952.

Sugar futures rose, buoyed by a supportive report from Brazil cane crush industry. Raw sugar futures for March delivery climbed 2.9% to settle at 14.28 cents a pound on the ICE Futures U.S. exchange. Brazilian sugar mills in the country’s center-south region produced slightly less sugar than expected in the first half of October, due to lower prices and wet weather during the period.

Prices of sugar fell in the key wholesale markets of north India due to sluggish demand from bulk buyers. The sentiment for sugar prices is bearish as the cane-crushing season for 2017-18 (Oct-Sep) was drawing near.

China sugar imports in September fell two-thirds from a year earlier as hefty tariffs on foreign arrivals continued to dent buying appetite. Sept sugar imports drop 67.5 % on year to 160,000 metric tonnes.

Brazil sugar exports in 2017-18 (Apr-Mar) are seen at a record high of 29.6 million metric tonne in terms of raw value, up 1.1 million metric tonne or 3.9% on year. Of the total exports, raw sugar is expected to contribute 23.68 million metric tonne. The USDA arm has kept its estimate for total sugarcane production in Brazil in 2017-18 unchanged at 645 million metric tonne.

Mills in Maharashtra are likely to produce around 1.5 million metric tonne sugar in November, the first month of the start of the season, up nearly 60% from the corresponding month last year. Around 150 mills are likely to start operations in November this season, compared to 100 mills in the same period last year. Reports surfaced in Maharashtra about a possible delay in crushing due to continued rains across the state.