Bitter harvest for mills as sugar prices decline

Millers in the state may face problems if sugar prices fall below their current levels amidst the estimated increased sugar production. Even the probability of lifting of ban on sugar export looks bleak.

"The ex-mill price in the state is Rs 1,550 per quintal and any further drop may put the millers into a tight financial spot," Maharashtra State Cooperative Sugar Factories Federation MD Prakash Naiknavare said. He added that all signals are pointing towards a fall in the prices as the demand is seen falling.

"There are no major festivals coming, production is good and ban on sugar exports persists. There is thus no sign of sugar consumption taking an upturn," he said.

The sugar production in the state is estimated to be at 70 lakh tonne for the year October 2006 to September 2007, he said. Sugar production in 2005-06 was at 52 lakh tonne.

Naiknavre said it is high time that government should lift a ban on sugar exports even though exporters are unlikely to start exports immediately. "The international prices have fallen and I think for next two months, actual physical exports will be nill as the domestic prices are up by Rs 100 compared With international prices," he said.

Cane crushing in the state has taken off well with over 135 mills starting their crushing, he said. "A total of 90 lakh cane has been crushed amounting to a sugar production of 9 lakh tonne at a recovery rate of 10.05 per cent," he added. During the 2005-06 season, the state produced 52 lakh tonne of sugar and crushed 446 lakh tonne of cane. The country's total output this sugar season is estimated at 23 million tonne (mt) against 17.5 million tonne last year.

With carry over stocks of about 5.5 million tonne, the availability for domestic consumers is expected to touch 28.5 million tonne, way above the total consumption of 18.5 million tonne.