Sales pick up as prices bottom out

ISMA announced the production trend, suggesting a 26% jump in sugar production in the 2017-18 season

Sugar prices seem to be bottoming out as northern and western markets, including Mumbai, have seen the prices stabilising at lower levels in the past few days. Reports of higher sugar production had led to a sharp fall in prices in recent months. 

“The wholesale sugar prices have improved in some parts of north and west India by Rs 30 to Rs 100 a quintal. Sugar sales have also witnessed a slight improvement in the past few days because of buying interest shown by sugar traders,” the Indian Sugar Mills Association (ISMA) said in a note on Wednesday, quoting the data of the consumer affairs ministry.

ISMA also announced the production trend, suggesting a 26 per cent jump in sugar production in the 2017-18 season, which began in October. “As of December 31, 2017, 485 sugar mills were in operation in the country and they produced 10.32 million tonnes (mt) of sugar compared to 8.19 mt produced last year same time,” said the note. Over the past fortnight, sugar production has slowed.

 

The association said, “As against 300,000 tonnes of raw sugar permitted by the government in September 2017, to be imported and processed into white sugar by December 15, 2017, only 235,000 tonnes of raw sugar has been imported. Of this, about 200,000 tonnes of white sugar has been produced from the imported raws by the mills.” This means the full quota of import has not been utilised.

Due to higher production, the prices started moderating and fell 14 per cent since September 2017.

ISMA’s estimate of 25.1 mt of sugar production in 2017-18 is 4.8 mt more than the very low sugar production of 20.3 mt last year. The estimated production of 25.1 mt will get fully consumed domestically as the domestic consumption this year is estimated at around 25 mt.

The increase is basically from UP and Maharashtra, which have produced 700,000 tonnes and 1.3 mt, respectively, more than last year. Overall, these two states would be contributing 1.3 mt and 3.2 mt, respectively, in the whole season, of the estimated higher production of 4.8 mt. In Maharashtra, 180 sugar mills are in operation, while in Uttar Pradesh, the number is 116.

 

ISMA said total sugar availability in the country during 2017-18 was expected to be 29.17 mt.  

Against this, considering a demand growth rate of around 2 per cent, sugar consumption is estimated at 25 mt, it said. And, thus, the closing stock at the end of September 30, 2018, is expected to be about 4.17 mt. This will be similar to the opening balance of this year and will be just sufficient to meet the first two months’ domestic consumption.

Based on satellite images of the cane area remaining to be harvested, trend of recovery, yield and drawal percentage of sugarcane achieved so far, ISMA will come out with its second advance estimates of sugar production for 2017-18 SS in the third week of January 2018.