Mills export refined sugar due to lack of parity in raw sugar

Since cane prices were up despite sharp fall in sugar price in 2015, raw sugar shipments proved to be a loss making proposition

In a sudden change in stance, sugar mills have started exporting white sugar due to the lack of parity in raw sugar exports.

Since cane prices remained elevated despite a sharp fall in sugar price this year, shipment of raw sugar proved to be a loss making proposition. Interestingly, rising prices in domestic market have worsened sentiment for sugar exporters. As against 15 per cent (to Rs 3106 a quintal of Sugar M) rise in local markets, sugar prices have risen a marginally 2 per cent (to cents 15.24 per pound of near month contract on InterContinental Exchange) in global markets because of oversupply.

"Since there is no parity on export of raw sugar due to high cost of sugarcane in India and depressed global price, sugar mills in India have produced almost negligible quantum of raw sugar and are mainly exporting white sugar," said apex industry body Indian Sugar Mills Association (ISMA) in a statement today.

According to industry sources, sugar mills have contracted for export of around 0.8 million tonnes till date and have physically despatched around 0.3 million tonnes. The government has fixed a quota of 4 million tonnes of sugar exports from India for the current crushing season (October '15 - September '16).

Though domestic ex-mill sugar prices have improved in the past fortnight by Rs 100 - 200 a quintal, the all India average ex-mill price of sugar for the last three months i.e. October to December, 2015, stands at around Rs 2700 - 2800 a quintal. The current average price is, however, Rs 400 - 500 a quintal below the all India average cost of production of sugar.

Meanwhile, sugar mills have reported 6.5 per cent higher production at 7.99 million tonnes so far this season as against 7.49 million tonnes of its output reported in the same period last year. In fact, average sugar recovery in Maharashtra has been reported lower at 10.36 per cent this year from the level of 10.44 per cent last year due to lower sucrose formation in cane in drought-prone regions. Still sugar output in Maharashtra was reported higher at 3.37 million tonnes so far this year as against 3.26 million tonnes by the same time last year.

 

 

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