Sugar

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.

Prices of sugar were up in the key wholesale markets of north India amid increased bulk demand. Even though the sentiment for the coming days is bearish due to onset of crushing season, brisk spot buying ahead of Diwali has supported prices.

New sugar mills soon be set up and the present ones revamped and modernised to help the sugarcane farmers in the state.

With the festive season upon us and as the new crushing season begins later this month, the sugar stocks are in focus. Dwarikesh Sugar Commenced this quarter with opening stock of 9.78 lakh quintals of sugar and have already sold nearly 8.5 lakh quintals. The sales have been brisk and the average price of sugar for the quarter has been around Rs 36.50- 36.75 per kg. For the new sugar season expect a 12-15 percent increase in crushing numbers and a similar increase in production. For the last year the company produced 33 lakh quintals of sugar. ISMA has estimated output is at 25 million tonnes for the year.

After slowing down to a mere 2.5 per cent last year, sugar mills are hoping for a recovery in ethanol blending with petrol this year, due to a significant increase in cane output and thereby proportionate improvement in the availability of extra-neutral of alcohol (ENA). ENA is a derivative of sugar manufacturing and a pre-form of ethanol.

Prices of sugar in the key wholesale markets of the country were largely unchanged in a thin trade. While demand had improved earlier this month on account of festive buys ahead of Diwali, as of now, only day-to-day demand is seen in the markets keeping the prices stable. In the short term, prices are likely to remain in a range.

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.