Sugar

Sugar mills in drought affected Tamil Nadu have demanded tariff-rate quota (TRQ) import of 6 lakh tonne of raw sugar at zero import duty to help minimize losses. The Indian Sugar Mills Association (ISMA), has been opposing imports, claiming that the country has enough stock of the sweetener. However, South Indian Sugar Mills Association, Tamil Nadu (SISMA-TONNE) has approached the central government, requesting it to allow sugar import. Officials aware of the matter told ET that the government is reviewing the situation and may accept their demand, as it not only helps keep sugar prices in southern India under control but also enable sugar mills clear cane farmers dues.

Prices of sugar were largely unchanged in the key wholesale markets of the country due to lacklustre trade. Thin trade in the market can be attributed to the fear of government action to ensure enough supplies in the domestic market.

Mills in Brazil Centre-South region produced 3.41 million tonne sugar in the second fortonneight of July, up 9.5% from 3.12 million tonne in the year ago period. Centre-South Brazil accounts for over 90% of the country’s total sugar output and mills in the region crushed 50.74 million tonne cane during Jul 16-31, up 2.6% on year. Between Apr 1 and Jul 31, mills have crushed 297.33 million tonne cane, down 4.7% on year. During the same period, they produced 17.57 million tonne sugar, up 3.5% on year. The Centre-South region also produced 11.57 billion ltr of ethanol during the period, compared with 12.88 billion ltr a year ago. Of the total cane crushed, around 48.4% was used for sugar production, while 51.6% was used to make ethanol.

Egypt has contracts to buy 850,000 tonnes of sugar so far, this year, covering the nation needs through January. Egypt typically consumes about 3 million tonnes of sugar a year but produces a little more than 2 million tonnes. The gap is filled by government and private imports, usually purchased between July and October. Egypt state buyer ESIIC is set to hold a purchase tender for 50,000 tonnes of raw sugar for November arrival.

The State Bank of Pakistan (SBP) has asked authorised dealers (banks) to start processing applications for sugar exports. The SBP issued a circular that the process begins as per the instruction given by the Ministry of Commerce on July 2 for the export of 300,000 tonnes of sugar. Sugar mills are not satisfied with the limit of 300,000 tonnes set by the Economic Coordination Committee of the cabinet. They claim there is a glut-like situation in the domestic market. They demand that the limit on the export volume of sugar should be enhanced. Sugar prices recently increased in the domestic market as some parts of the country suffered shortages of the commodity. The SBP advised the authorised dealers to forward the requests of sugar mills to the director of the central bank Foreign Exchange Operations Department (FEOD) for approval.

Brazil center-south region produced 3.41 million tonnes of sugar in the second half of July, the most for a 15-day period, as very dry weather allowed mills to work around the clock in the world largest cane belt. Mills allocated 50.33 percent of the cane to sugar production in the second half of July, versus 48.05 percent a year earlier.

Sugar mills from southern Maharashtra may not be able to start operations before Diwali, even as the industry and government are preparing for advance sugarcane crushing operations by a month to October to tide over any shortages during the festival season. Mills in the region comprising Sangli, Satara and Kolhapur account for the biggest share in sugar production of Maharashtra, the leading producer in the country. Region gets a few spells of heavy rainfall around Dussehra (which falls on September 30), which makes harvesting difficult due to wet fields. The migrating harvesting labour does not start from their villages before Diwali. Thus, mills from Kolhapur will begin crushing only after Diwali (October 19).

Weak conditions were seen at the wholesale sugar market in the national capital during the week with prices falling on persistent supplies from mills amid expectations of a cut in import duty by the government to improve availability in the market to meet festive season demand and curb speculative rise.

Food and Consumer Affairs minister Ram Vilas Paswan has said that the country has sufficient sugar supply and there was no need to import it.The government was keeping a watch on pulses price and would increase import duty if required.

U.S. beet sugar production for the 2017/18 August-July crop year is increased by 89,500 short tons, raw value (STRV) to 5.131 million based on area and sugarbeet yield forecasts made by NASS in Crop Production report. Early-season production occurring in August and September is projected to constitute 10.7 percent of the total. Revised fiscal 2016/17 production of 4.998 million STRV incorporates the updated early season production. The projection for fiscal 2017/18 is 5.068 million STRV, up 80,000 from last month. Although NASS forecasts reduced area harvested for both Florida and Louisiana sugarcane, forecast yields in both states are up strongly over last year. Florida cane sugar production for 2017/18 is increased by 126,000 STRV to 2.126 million and Louisiana is increased by 26,000 STRV to 1.626 million. USDA increased the 2016/17 raw sugar tariff-rate quota (TRQ) by 269,724 STRV and extended the time under which the sugar can enter by an additional month to October 31, in the 2017/18 fiscal year. The Office of the U.S. Trade Representative allocated this amount and reallocated existing, but yet unshipped, raw sugar TRQ among supplying countries. It is estimated that an additional 148,470 STRV of TRQ raw sugar will enter in 2016/17 and 161,499 STRV in 2017/18. Sugar imported from Mexico is projected to increase by 103,932 STRV in 2016/17 after the Commerce Department increased the 2016/17 Export Limit but is reduced by nearly that same amount in 2017/18 due to lower beginning stocks in Mexico. Re-export imports of 25,000 STRV previously estimated to enter in 2016/17 are now projected to enter in 2017/18. High-tier tariff imports for 2016/17 are reduced to 10,000 STRV, based on the pace to date. Mexico 2016/17 sugar imports and deliveries for consumption are up fractionally based on the pace to date. Deliveries in 2017/18 are increased marginally to keep sweetener consumption per capita the same as in 2016/17. Exports to the United States in 2016/17 are increased by 88,949 MT to match the Export Limit increase made by the Commerce Department. These adjustments for 2016/17 imply a reduction in ending stocks of 86,577 MT. Exports to the United States for 2017/18 are residually projected at 1.466 million MT, an amount 94,091 lower than projected last month.

Prices of sugar fell in the key wholesale markets of Delhi because of weak demand from bulk buyers. Millers have lowered prices of sugar to trigger demand. Sugar prices in Mumbai, however, were steady in a thin trade. Buyers are in a wait-and-watch mode. Everyone is waiting for government action. The government is likely to allow import of 300,000-500,000 tonne of sugar at zero duty to augment supply during the upcoming festival season.

The time may be ripe to implement the Rangarajan formula for sugarcane pricing, read a central government letter to Uttar Pradesh in July, sking it to do away with the state-advised cane price. While the government and sugar industry seem to be on the same page in this regard, the move is unlikely to go down well with the state cane farmers. Farmers across the country, including those in Uttar Pradesh, have been demanding higher prices for their crops due to rising input costs. Although the Centre fixes cane price every year, some states like Uttar Pradesh, have been typically fixing a higher price for cane over the years to woo farmers, who comprise a chunk of the vote bank. The revenue-sharing formula recommended by the Rangarajan committee, set up during the United Progressive Alliance regime, entitles farmers to a price equivalent to 75% of the mills average realisation from sale of sugar and its by-products.

Nestle R&D Centre Singapore is committed to cutting down the sugar and salt content in its products by 2020. The food and beverage company is looking at reducing the sugar content by five per cent and salt by 10 per cent within the next three years.

Despite huge stock in the country, the rates of sugar in wholesale market have increased by around Rs500 per 50kg during the last week due to limited sugar supply from the mills. As a result, the prices in retail market have jumped by Rs5 to Rs60 per kg from earlier rate of Rs55 per kg. Presently, no shopkeeper is following the official rate of sugar to sell the commodity at Rs55 per kg with some of the retailers refusing to sell white sweetener. The rates have surged because the mills had put an unannounced ban on supply in protest against the government for not allowing export of sugar. He said that the dealers could not lift sugar from the mills despite an upward surge in its prices.

Sugar futures declined, extending losses for a crop that has been weighed down by abundant harvest prospects in Brazil. Raw sugar for October delivery declined 2.9% to settle at 13.24 cents a pound, extending its losses to the eighth consecutive session on the ICE Futures U.S. exchange. The market expected record 50.69 million tons of cane was crushed in the second half of July in central-south Brazil, up 2.6% on the year. Sugar is being pressured because the harvest has been going full-speed for two months, which is the longest stretch of dry weather in at least four years.

Prices of sugar were largely unchanged in the key wholesale markets of the country due to lacklustre trade. Thin trade in the market can be attributed to the fear of government action to ensure enough supplies in the domestic market. The government is likely to allow import of 300,000-500,000 tonne sugar at zero duty to augment supply during the upcoming festival season.