Sugar

Around 54,750 metric tonne of imported raw sugar is expected to arrive at Kakinada port, Andhra Pradesh on Oct 22 through Interocean Shipping agency. The government, earlier this month, had allowed import of 300,000 metric tonne raw sugar at a basic customs duty of 25% under the tariff rate quota for 60 days.

Rabobank expects sugar output in the European Union o rise to 20.5 million metric tonne in 2017-18 from 16.7 million metric tonne produced in 2016-17. The increase be led by growth of more than 2 million metric tonne in output in both France and Germany, to 5.8 million metric tonne and 4.5 million metric tonne, respectively. USDA’s Europe Union bureau had estimated the sugar output in the region at 20.1 million metric tonne for 2017-18. The expectations of a rise in sugar production in EU can be attributed to the abolition of output quota in September. The last agricultural quota system in place, managing sugar production in the EU, was scrapped on Sep 30, after nearly 50 years.

Rayat Kranti Sanghatana (Kolhapur), the newly formed organization of farmers belonging to minister of state for agriculture Sadabhau Khot has demanded that sugar factories should pay all pending dues of last year’s sugarcane crushing season. The organization has threatened to launch an agitation and has stated that farmers not allow the factories to start this year’s crushing season if they fail to clear the dues. After declaring the rate of sugarcane per metric tonne, the sugar factories pay farmers their dues in three installments. The first installment which is more than 80% of the total amount after the crushing season, while the other two installments are delayed. Warned the factories to ensure that they pay all the remaining dues before starting this year crushing. Not allow the factories to start crushing this year if they do not make the payment.

Prices of sugar fell in the key wholesale markets of north India and in Kolhapur due to weak demand from bulk buyers and selling by mills. Traders are eager to sell sugar ahead of Diwali as prices are expected to fall after the festival. The medium-term outlook for sugar is seen bearish as crushing start soon. Traders eager to sell sugar ahead of Diwali as prices expected to fall after festival.

Prices of sugar fell in the key wholesale markets of northern India as the crushing season inched closer. Poor demand from bulk buyers also weighed on prices. Expectations that new sugar soon start arriving in markets weighed on sentiment. The surge in demand ahead of Diwali has also eased now.

The government is likely to raise the price of ethanol by around 5% for supplies to oil-marketing companies for blending with petrol in the next marketing year through November 2018. The Cabinet Committee on Economic Affairs would soon take up a proposal to increase the ethanol price to around Rs 41 per liter for the 2017-18 marketing year from Rs 39 this year. The increase in the ethanol price would improve the ability of the sugar mills, the largest producers of the bio-fuel, to pay farmers on time for cane supplies.

Mills in Uttar Pradesh are likely to delay crushing operations for 2017-18 (Oct-Sep) season to the last week of October due to poor sugar recovery from cane. Immediate start of sugarcane crushing seems bleak. It is highly unlikely as the sugar recovery is very low currently. The average sugar recovery in west Uttar Pradesh is coming out to be only 7%. The average sugar recovery from cane in Uttar Pradesh was at 10.61% in 2016-17.

Futures contracts of sugar 11 ended higher as millers in Brazil are producing more ethanol compared to sugar. The most active March ICE sugar 11 contract ended 1.2% higher at 14.17 cents a pound

Mills in centre-south region crushed 40.3 million metric tonne of cane during the second fortnight in September, down 5.2% from the same period a year earlier. During the period, they produced 2.9 million metric tonne of sugar and made 2 billion liters of ethanol. Brazil is the world’s largest producer of the sweetener and its centre-south region produces 90% of the country’s sugar.

Prices of sugar rose in the key wholesale markets of Mumbai as demand improved ahead of the festival of Diwali. The rise in prices of the sweetener in Mumbai can also be attributed to the increase in transportation charges due to lack of vehicles. There are no return goods available from Mumbai, unlike other cities. So, the trucks and lorries which bring sugar from Kolhapur prefer cities like Hyderabad.

Dwarikesh Sugar Industries Ltd expects sales to rise by up to 15 percent in the 2017/18 crop year as production in Uttar Pradesh could jump to a record high. The state’s output could jump 14 percent from a year earlier to a record 10 million tonnes. Dwarikesh Sugar produced 330,000 tonnes of the sweetener in the 2016/17 crop year that ended on Sept. 30.

Rabobank raised its forecast for the world sugar output surplus in the newly-started season. The bank raised to 4.5m tonnes, from 2.7m tonnes, its estimate for the world production surplus in 2017-18, which began at the start of this month. The revision reflected in part improved expectations for output in Brazil, where the bank quoted an assessment from Unica, the cane industry group, that output in the key Centre South region is now projected to exceed last season’s 35.6m tonnes. Initially, Unica had forecast output of 35.2m tonnes from the Centre South, which is responsible for more than 90% of Brazil’s total sugar output.

USDA Europe Union bureau expects sugar output in the region rising to 20.1 million tonne in 2017-18 from 16.5 million tonne produced in 2016-17. The estimate is also higher than USDA’s official estimate of 18.6 million tonne. USDA’s EU bureau has also estimated exports from the region higher on year at 2.5 million tonne. The expectations of a rise in sugar production in EU and export quantities can be attributed to the abolition of output quota in September.

India sugar output in October is likely to achieve only 40 per cent of the earlier assured quantity. Most mills in UP are now looking to start the crushing season by the last week of October, anticipating a labour shortage ahead of Diwali. With bumper cane availability, the UP government estimates a 10 per cent rise in output this season at 10 million tonnes (mt), a fourth of India’s overall sugar production estimate of 25.1 mt for October 2017-September 2018. Sugar mills in Maharashtra are planning to start the new season from November 1. The delay was aimed to avoid problems in harvesting of cane due to heavy rainfall in September which left fields muddy. Also, actual maturing of cane takes place in October and November.

Prices of sugar rose in most key wholesale markets of the country due to higher demand ahead of the festival of Diwali. Sugar prices rose in Mumbai as well, as transportation charges have increased due to lack of vehicles. Traders are bullish on sugar prices in the near term due to expectations of further rise in demand from bulk buyers such as sweets makers ahead of Diwali, which celebrated on Oct 19 this year.