Domestic sugar production, opening stock expected to be higher next season

With the malls and restaurants being allowed to open under unlock 1.0, the sugar demand will further rise.

Expectations of a robust sugar output and a higher-than-expected opening stock for the next crushing season (October 2020-September 2021) are huge, despite the domestic crushing season nearing its end with just a few mills operational.

According to the Indian Sugar Mills Association (Isma), the closing balance at the end of current sugar season (2019-20), earlier estimated to be 10 million tonne (mt), may be higher at 11.5 mt on account of higher-than-projected production. “There has been much talk about cane availability and higher sugar production for the next season. Isma will obtain satellite images of the sugarcane area across the country, in the latter part of June 2020, to get an idea of the acreage available for harvesting next year,” Isma said on Tuesday.

The impact of the lockdown on sugar demand is expected to be lower at 0.5 mt, from the earlier estimated 1 mt, thus contributing to the higher opening stock for next season. 

Earlier, Isma had pegged output for the current season at 26.5 mt. However, gur (jaggery) and khandsari (unprocessed sugar) manufacturers had shut operations in UP early because of the lockdown, which diverted a substantial quantity of cane to mills for crushing.

 

 

Ethanol procurement

Meanwhile, oil marketing companies (OMC) on June 1 floated the third round of Expression of Interest (EoI) submission, inviting bids from ethanol producers for another 990 million litre (ML) of ethanol in 2020-21, for supplies during July-November 2020. 

There has been no change in the ethanol procurement prices approved in August, thus confirming there will be no change in the ethanol fuel blending policy. In other words, the long-term commitment by the government to procure ethanol at transparent and stated policies stands, removing all doubts about any such changes, Isma underlined.

Isma has released production figures for the current season, which stood at 26.82 mt till May 31. They were 5.93 mt lower than the 32.75 mt in the corresponding period last year.

With malls and restaurants being allowed to open, sugar demand will rise. Therefore, along with the summer demand, it is expected that mills may be able to sell the entire June quota.