ISMA revises sugar output downward to 25 mn tonne in 2010-11

Indian Sugar Mills Association (ISMA) today revised downward the country's sugar production to 25 million tonnes in the 2010-11 season due to late rains in Uttar Pradesh, the second biggest producing state of the sweetener.    

"We estimate sugar output to be 25 million tonnes, as against 25.5 million tonnes projected at the beginning of the season," ISMA President Narendra Murkumbi told reporters.      

Sugar output in Uttar Pradesh is lowered to 6.4 million tonnes from 7 million tonnes due to late rains, while in Maharashtra, the country's biggest producing state, it is kept unchanged at 9.4 million tonnes, the ISMA said.

However, the revised estimates are slighly higher than the government's projection of 24.5 million tonnes for the 2010-11 season (October-September).     

According to ISMA, the country's sugar demand is expected to be 22 million tonnes this year.     

"The quantity of sugar released in February is also excess, which means that total offtake in the domestic market will not be more than 22 million tonnes," Murkumbi said.      

On possibility of sugar exports, he stressed that the "government should allow export of 5,00,000 tonnes of sugar under the open general licence (OGL) scheme" as this will help mills to improve their finances.    

"The cash-flow situation of mills is getting strained. They will not be able to sustain as stocks are building up. One million tonnes (10 lakh tonnes) can be easily exported under OGL as there is a surplus of three million tonnes this year," he said.      

He also mentioned the India has a export window open between February and mid-April. Thereafter, the Brazil crop is expected to enter the market.     

Currently, government has kept on hold export of 5 lakh tonnes of sugar under OGL in the wake of high inflation. ISMA, the apex body for private sugar mills, reviewed the production consumption situation of sugar for 2010-11 season.

ISMA Director General Abinash Verma said, "Because of late rains in Uttar Pradesh, recovery was marginally lower than expected. Therefore we have revised UP estimate downward to 6.4 million tonnes."     

On sugar price trend, the ISMA observed that the fall in wholesale sugar prices is not being reflected in the retail market, where the sweetener is available at Rs 30-32 per kg.   

"Difference between ex-factory price and retail price is widening," Murkumbi said the ex-factory price of sugar has declined by Rs 200 per quintal in the last few months.

"It is likely to fall further due to surplus production this year and an expected healthy crop for the next season," he said.   

Ex-factory price of sugar in Uttar Pradesh is ruling below Rs 2,600 per quintal, while that of Maharashtra below Rs 2,800 per quintal, he added.