Sugar

Prices of sugar continued to fall in key wholesale markets of India after the government allowed imports of sugar. The government allowed import of 300,000 tonne raw sugar at a basic customs duty of 25% under the tariff-rate quota for 60 days. Sugar imports currently attract a duty of 50%.

Some sugar mills in western Uttar Pradesh are likely to begin cane crushing operations for 2017-18 (Oct-Sep) on Oct 10. Mills will halt cane processing for a week on account of Diwali, scheduled Oct 19, and resume crushing operations by Oct 25. Most mills in the state are expected to begin crushing sugarcane by late October.

Sugar output in Thailand for 2017-18 (Nov-Oct) is expected to rise to 11.5-11.8 million tonne from 10 million tonne a year ago. The rise in sugar production can be attributed to increase in area under cane in the country and favorable weather conditions. Acreage has increased this season as cane prices for 2016-17 were good. The area under sugarcane in the country in 2017-18 is estimated at about 1.77-1.79 million hectares and the cane output is seen at 107-110 million tonne, higher from 92.90 million tonne produced a year ago.

Unusually dry weather in Brazil’s center-south sugar-producing region is likely to cut the total cane output per hectare for the rest of 2017 and in 2018.

Raw sugar futures on ICE settled higher, boosted by a weak dollar and dryer-than-normal weather in Brazil. October raw sugar settled up 0.4 percent, at 14.09 cents per lb, 2.5 percent higher on the week. The market was supported by the weak dollar while speculators also continued to reduce a large net short position.

Prices of sugar were down in key wholesale markets across the country as the market factored in the import of sugar at a concessional duty in the next few days. Expectations of a record high production in Uttar Pradesh also weighed on the sentiment in north Indian markets. Sugar prices fell by 10-15 rupees per 100 kg in the spot markets of Delhi and Muzaffarnagar. Sluggish demand due to “pitrapaksha”, an inauspicious period in the Hindu calendar for new purchases, is also seen weighing on prices.

The government has allowed import of 300,000 tonne raw sugar at a basic customs duty of 25% under the tariff rate quote for 60 days. The import of 300,000 tonne sugar has been allowed through the ports of Tuticorin and Chennai in Tamil Nadu, Karaikal in Puducherry, Mangalore in Karnataka, and Kakinada, Visakhapatnam and Gang avaram in Andhra Pradesh. Since the import has been allowed under the tariff rate quota, millers and refiners have to convert the imported raw sugar into refined or white sugar within 30 days from the date of bill of entry.

Sugar output in Bihar is likely to increase to 550,000 tonne in the new season that starts October, marginally higher than this year’s 525,000 tonne. Floods in many parts of the state have hit output expectations for the upcoming season. Initially, the sugar output was expected at a record high of 625,000 tonne, as the cane acreage was very good, and farmers in most parts of the state had switched to high yielding cane varieties.

Sugar output in Karnataka for 2017-18 (Oct-Sep) is expected to be at 2.0-2.3 million tonne compared with 2.1 million tonne produced in 2016-17. India Sugar Mills Association revised its estimate for sugar production in Karnataka for the upcoming season to 2.3 million tonne from 2.5 million tonne projected earlier. The sugar body has revised the output view downwards as the satellite mapping showed that the area under cane in the state was lower than what was expected. Production of sugar may also get hit in 2018-19 owing to scanty rainfall in the state this year.

India Sugar Mills Association is likely to maintain its sugar output estimate for 2017-18 (Oct-Sep) at 25.1 million tonne. There is slight reduction in Karnataka’s output and a rise is seen in sugar production in Uttar Pradesh. Uttar Pradesh is the top producer of sugarcane in the country and along with Maharashtra accounts for half of India’s total sugar output.

Uttar Pradesh official:’17-18 cane area seen 2.3 million ha vs 2.1 million. Sugar output in Uttar Pradesh is likely to rise to a record 10.3 million tonne in the next season starting October from 8.77 million tonne year ago. Uttar Pradesh is the top producer of sugarcane in the country and along with Maharashtra accounts for half of India’s total sugar output. Last year, cane area in Uttar Pradesh was 20.5 lakh (2.05 million ha). This year there is an increase of 10-12%, and area is seen around 23 lakh (2.3 million ha). Sowing of sugarcane is almost at its ending stage and farmers so far have already planted nearly 2.3 million ha of sugarcane in Uttar Pradesh, up 5.1% on year.

Mills across the country are likely to produce around 400,000 tonne sugar in October. Earlier, Indian Sugar Mills Association had estimated production in October at 800,000 tonne, due to expectations that crushing of sugarcane would start earlier than usual this year. The Centre had asked millers across the country to begin cane crushing operations for the 2017-18 (Oct-Sep) season early in October, in a bid to tide over likely shortages during the festival season.

Tamil Nadu Civil Supplies Corp has invited bids to buy 40,000 tonne of S-30 grade sugar. Bids must be submitted on Sep 21. The government is procuring sugar from the open market for supply under the public distribution system.

Prices of sugar fell in the wholesale market of Mumbai because of weak demand and on the reports of probable sugar imports by the government. Prices in Tamil Nadu are high due to depletion in stocks and lower expected production in 2017-18 (Oct-Sep).

The government is likely to allow import of 300,000 tonnes of raw sugar at 25-30 per cent import duty. A notification on the matter is likely by Wednesday. Currently, sugar attracts an import duty of 50 per cent, making imports commercially unviable. The government is likely to soon take a decision on import of sugar to augment domestic supplies, as stocks are expected to fall to critically low levels. The imports then were also subject to zonal quantity restrictions. The government had allowed import of 300,000 tonnes duty-free raw sugar in the south zone via Tuticorin, Chennai, Mangaluru, and Kakinada ports, 150,000 tonnes in the west zone via Kandla and Mumbai ports and 50,000 tonnes in the east zone through Haldia and Paradeep ports. The government had later added Visakhapatnam and Gang avaram ports in Andhra Pradesh and Karaikal port in Puducherry to the list of ports where imports were allowed.

Prices of sugar fell in the key wholesale markets of Delhi and Muzaffarnagar due to fear of government allowing import of raw sugar to tide over any shortages. Sugar prices remained unavailable in Maharashtra because markets were shut for Ganpati Visarjan. The government is likely to allow import of 300,000 tonne of raw sugar at 25-30% import duty.