Sugar production up 42% in Oct-Dec at 110.22 lakh tonne: ISMA
04/01/2021 16:33
India"s sugar production increased 42 per cent year-on-year during October-December period at 110.22 lakh tonne on higher cane output and an early start of mills in Maharashtra, according to trade data. Sugar marketing year runs from October to September.

Indian Sugar Mills Association (ISMA) said in a statement that mills produced 110.22 lakh tonne of sugar during October-December period of 2020-21 sugar marketing year as against 77.63 lakh tonne in the corresponding period of the previous year.

In Maharashtra, sugar production stood at 39.86 lakh tonne during the period under review as against 16.50 lakh tonne in the year-ago period. Sugar output in Uttar Pradesh rose marginally at 33.66 lakh tonne from 33.16 lakh tonne.

Around 10 lakh tonne of sugar export contracts are said to have been entered into by now and sugar has already started moving for exports.

The government has set a target of 60 lakh tonne of sugar exports during the 2020-21 marketing year, ending September, to liquidate surplus stock.

On the sugar export subsidy, ISMA said: "Considering that the world sugar prices were better in December 2020 as compared to what it was in September 2019, when the Government had announced last year’s export programme for 2019-20, the export subsidy for the sugar exports has been restricted by the government at Rs 6,000 per tonne."

However, it said the actual expenses incurred on internal transport, ocean freight and marketing and promotion charges are much higher.

"Sugar production in the second largest sugar exporting nation i.e.Thailand, is almost 80-90 lakh tonne less than what they usually produce. Therefore, India has an opportunity to export its sugar to the Asian importing countries, especially Indonesia and Malaysia, in addition to its own traditional markets in the Middle East, Sri Lanka, Bangladesh, East Africa etc," the statement said.

India has a good opportunity to contract and export sugar till about March-April 2021, by when Brazilian sugar comes into the market, ISMA said.

"The world trade happens in relation to the futures prices in the London ICE exchange for white sugar and New York exchange for raw sugar. Currently, sugar contracts are happening in relation to the March futures, but in a couple of months, the same will happen with respect to May futures, which is substantially lower as compared to March futures.

"The global futures market is inverse and therefore, as the season progresses, the sugar export prices are expected to be lower as compared to what one is getting currently," ISMA said.

Further, the industry body said the Indian Rupee has appreciated in the last 10 days from over Rs 74 per dollar to below Rs 73 per dollar, thereby substantially reducing the return in Indian Rupee to the sugar mill.

"Considering that the world wants Indian sugar, and the fact that sugar production is lower in Thailand, EU etc, India should be able to export its targeted volumes with the support of the Rs 6,000 per tonne of export subsidy during 2020-21," ISMA said.