Sugar

U.S. fiscal year 2016/17 beet sugar production is decreased 64,000 short tons, raw value (STRV) based on lower expected sucrose recovery. Cane sugar production in Texas is reduced by 2,795 STRV based on final processor reporting. TRQ imports entering under Free Trade Agreements are increased by 2,555 STRV. Deliveries for human consumption are increased by 100,000 STRV based on pace to date. Ending stocks for 2016/17 are estimated at 1.477 million STRV. Sugar production for 2017/18 is projected at 8.700 million STRV, the sum of beet sugar production of 4.950 million and cane sugar production of 3.750 million. Imports for 2017/18 are projected at 3.858 million STRV and are comprised of TRQ imports of 1.373 million; re-export imports of 175,000; imports from Mexico of 2.301 million; and high-tier tariff imports of 10,000. Projected 2017/18 TRQ imports of specialty sugar include only the WTO minimum quantity because any additional quantities have not been announced by the Secretary of Agriculture. Exports for 2017/18 are projected at 25,000 STRV. Deliveries for human consumption are expected to increase 1.0 percent year-over-year to 12.322 million STRV. Ending stocks for 2017/18 are projected residually at 1.534 million, implying an ending stocks-to-use ratio of 12.3 percent. For 2016/17, Mexico sugar exports to non-U.S. destinations are reduced by 58,919 metric tons (MT) to 110,000 based on pace to date. Product re-export deliveries under the IMMEX program are increased 60,000 MT to 390,000 to match the total now estimated by Mexico authorities for 2015/16. Ending stocks are estimated residually at 1.342 million MT, an increase of 48,919 over last month. For 2017/18, Mexico sugar production is projected at 6.225 million MT based on a sugarcane crop of 55.000 million and a recovery of about 11.3 percent. Combined per capita consumption of sugar and HFCS for 2017/18 is projected the same as for 2016/17. With flat HFCS consumption, sugar deliveries for human consumption for 2017/18 are projected at 4.528 million. Exports to the United States are based on U.S. Needs as defined in the Suspension Agreements but, assuming additionally, that U.S. specialty sugar imports will be set at the same level as initially established for 2016/17.

Sugar output in the state during 2017-18 (Oct-Sep) is seen falling below 1 millionn tonne as Tamil Nadu faces the worst drought in 140 years. Last year, mills in the state had produced 1.37 millionn tonne sugar. Sugar Production in 2017-18 is likely to be even lower than the current season because of successive years of meagre rainfall in the state, a drop in cane acreage, and lower sugar recovery. Tamil Nadu received 62% below-normal rainfall during the key northeast monsoon season in Oct-Dec. Production suffer due to drought It be drastically reduced and if the current trend continues, sugar output not even touch 1 millionn tonne next year. Tamil Nadu has been producing below its capacity for the last two-three years because of water crisis and low recovery from cane. Sugarcane sowing had fallen 8.8% on year to 268,000 hactare this season due to poor monsoon rains.

Subdued demand at higher price levels weighed on sugar in the key wholesale markets of north India. Medium-grade sugar was sold in Delhi and Muzaffarnagar down 5 rupees from previous close. Prices of the sweetener, however, were unchanged in the key wholesale markets of Mumbai, and Kolhapur amid thin trade. Mills are maintaining prices despite low demand as they maintain supplies for the next five months and the production this year is seen low. Traders across north India are bearish on sugar prices in the near term. Prices are expected to decline further in north India due to a rise in output in Uttar Pradesh.

The government should impose additional tax on pre-packed foods which have high salt or fat content and on sugar-sweetened beverages to cut down on their consumption. Imposing additional tax on the purchase of commodities such as pre-packaged foods with high salt and fat content, sugar sweetened beverages, can be a pragmatic approach to reduce their intake. Companies should disclose the total calories content, carbohydrate, sugar, fat, protein, sodium and trans-fat added in their product, clearly on the labels.

Futures contracts of raw sugar on the ICE recovered today after as prices of the sweetener were nearing ethanol parity. A fall in sugar prices incentivises millers to shift to ethanol production instead of sugar. Millers in key cane-producing countries like Brazil have a choice between producing sugar or ethanol. Most-active July raw sugar contract had fallen to a 12-month low of 15.24 cents per pound. July contract was up 0.7% at 15.49 cents per pound.

Prices of sugar were unchanged in the key wholesale markets of Mumbai and Muzaffarnagar because of subdued trade. Mill owners did not lower prices of sugar despite a fall in demand. Earlier this month, prices had risen as retail and bulk demand had improved. Prices at both the markets were unchanged from previous close. On the NCDEX, the most-active May contract traded up 0.2% from the previous close.

Mills across Uttar Pradesh produced 8.73 million tonne sugar during Oct 1-May 8, up 28.4% on year. The state had produced 6.80 mln tn sugar during the corresponding period a year ago. Mills in the state have crushed 82.31 mln tn cane so far, compared with 64.14 mln tn in the year-ago period. Average sugar recovery in Uttar Pradesh as of now is 10.61%, slightly higher than 10.60% a year ago.

Prices of sugar fell in the key wholesale markets of Delhi due to sluggish demand at higher prices. Sugar prices fell by 5 rupees per 100 kg in Delhi. Prices of the sweetener were unchanged in the key wholesale markets of Muzaffarnagar, Mumbai, and Kolhapur because of subdued trade. Mill owners did not lower prices of sugar despite a fall in demand. Traders across the country are bearish on the sugar prices in the near term. Prices are expected to be lower in north India due to higher sugar output in Uttar Pradesh. Mills across Uttar Pradesh produced 8.73 mln tn sugar during Oct 1-May 8, up 28.4% on year. The state had produced 6.80 mln tn sugar during the corresponding period a year ago. Average sugar recovery in Uttar Pradesh as of now is 10.61%, slightly higher than 10.60% a year ago.

Futures contracts of sugar on the NCDEX rose as traders bought the commodity at low prices. The most active June sugar contract was up 0.5% from the previous close. sugar prices were largely bearish due to a fall in prices in global markets and on expectation of a rise in imports. Contracts on the NCDEX, however, are seen bearish in the days ahead, tracking weakness in global prices.

Prices of sugar in the key wholesale markets of Delhi and Muzaffarnagar rose on improved demand for the sweetener, with Stuckists replenishing their inventories at the start of the month. Retail demand from households usually increases during the first week, thereby supporting prices. Delhi and Mumbai, sugar was sold up 10 rupees from previous close. On the NCDEX, the most active May contract of sugar traded up 0.1% from the previous close.

In Maharashtra, prices of the sweetener are expected to fall as there is selling pressure on mills. Sugar prices are seen falling about 10 rupees (per 100 kg) on Monday. On Apr 5, the government had allowed duty-free import of 500,000 tonne raw sugar under the tariff rate quota. The trade body had on Apr 27 allotted 30% of the total quota for import of raw sugar to Shree Renuka Sugars. On the National Commodity and Derivative Exchange, sugar futures rose, in line with the rise in north Indian spot markets. the benchmark May contract was up 0.4%.

Prices of sugar rose in Mumbai and Kolhapur, as demand for the sweetener improved with Stuckists replenishing their inventories at the start of the month. In Maharashtra, prices rose also due to bargain buying after a fall in the last week. In Mumbai and Kolhapur, sugar prices were up 7 rupees per 100 kg from previous close. On the NCDEX, the most active May contract of sugar traded down 0.3% from the previous close. The government had on Apr 5 allowed duty-free import of 500,000 tonne of raw sugar under the tariff rate quota. On the National Commodity and Derivatives Exchange, sugar futures traded in a narrow range. Most active May contract of sugar was down 0.2% from the previous close. In north India, soaring prices are unlikely to sustain due to record high output in Uttar Pradesh.

Madhucon Sugar and Power Industries and Dalmia Bharat Sugar have surrendered their quota of 13,940 tonne raw sugar allocated to them by the Directorate General of Foreign Trade for import of raw sugar. Madhucon Sugar had applied for a quantity of 21,000 tonne raw sugar from the south zone, while Dalmia Bharat Sugar had applied for 100,000 tonne raw sugar–50,000 tonne each from the east zone and the south zone. The Directorate General of Foreign Trade, however, allocated a quota of 4,313 tonne raw sugar to Madhucon Sugar, and 5,750 tonne raw sugar to Dalmia Bharat Sugar from the east zone and 3,877 tonne from the south zone. The mills surrendered the quota as the quantity allocated to them was very small and thus import would be unviable.

Karnataka aims to produce 40 million tonne of sugarcane in 2017-18 (Jul-Jun), up 20% from the previous season, led by an increase in acreage. Karnataka is one of the major producers of sugarcane.

Prices of sugar rose in the key wholesale of markets of Maharashtra due to an increase in demand from bulk and retail buyers. Medium-grade sugar was sold up 7 rupees from previous close. Prices remained unchanged in Delhi and Muzaffarnagar amid thin trade. Demand has risen as stockists are replenishing their stocks. In Maharashtra, where prices had fallen for the past one week, demand also rose due to buying at lower price levels. Traders, however, are bearish on prices in the near-to-medium term. Demand not sustain for too long. It remains high only for this week. Prices in Maharashtra are also expected to fall as the selling pressure on mills is expected to increase once the imports come in.