Early crushing: Sugar output up 10% at 47.21 lt till Nov-end Fall in global raw sugar prices slows down export deals

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03 December 2021, New Delhi: An early start to the sugar crushing season in the country’s western region has pushed up the sweetener production by about a tenth till the end of November. According to the Indian Sugar Mills Association (ISMA), the production till November 30 this year was 47.21 lakh tonnes compared to 43.02 lakh tonnes in the same period last year. 

About 416 mills have started crushing this year as compared to 409 mills last year. In Uttar Pradesh, 101 sugar mills have started operations as of the end of November and produced 10.39 lakh tonnes compared to 12.65 lakh tonnes in the same period last year. 

In Maharashtra, 172 sugar mills have started crushing operations this year compared to 158 sugar mills until November end of last year. Until November end, sugar production in Maharashtra stood at 20.34 lakh tonnes compared with 15.79 lakh tonnes same period last year. 

Similarly, in Karnataka, 66 sugar mills had produced 12.76 lakh tonnes of sugar compared to an output of 11.11 lakh tonnes by 63 mills in the same period last year. In Gujarat, 15 sugar mills have produced 1.66 lakh tonnes compared to 1.65 lakh tonnes in same period last year. 

ISMA said the cane crushing operations in all the other States have also begun, and the pace of crushing is picking up. About 62 sugar mills operating in other states that have produced 2.06 lakh tonnes in this season until the end of November, higher than 1.82 lakh tonnes in the same period last year. 

As per information furnished by mills and estimations made by ISMA, total sales in the first month of the current season, that is, October 2021, was around 24.50 lakh tonnes against the domestic sales quota of 24 lakh tonnes given by the government. 

ISMA further said that it was noteworthy that the government had increased the time to sell an additional quota of 2.5 lakh tonnes which was allotted for September-October. 

Last year, during the same period, sugar sales were 22.73 lakh tonnes as against sales quota of 23 lakh tonnes. This year sales are higher mainly due to the easing of Covid restrictions, higher sales quota (about 26.50 lakh tonnes including carry over from September 2021), and higher festive demand.

Exports

Further, ISMA said contracts for sugar exports for about 35 lakh tonnes has already been contracted for exports in the current sugar season 2021-22.

Most of these contracts were signed when the global sugar prices were in the range of 20-21 cents per pound of raw sugar. However, with a fall in the global prices to below 20 cents, and now to around 18.6 cents per pound of raw sugar, the Indian sugar mills are not coming forward to sign further export contracts.

Considering the domestic ex-mill sugar prices in the western and southern part of the country and the global prices of around 20-21 cents per pound, prevailing in the last couple of months, most of the export contracts of the 35 lakh tonnes are by the sugar mills from Maharashtra and Karnataka.

The ex-mill sugar prices in north India are slightly higher compared to those in the western and southern parts of the country, and therefore not many export contracts have taken place from the northern region.

Ethanol production

ISMA also said that considering that a substantial quantity of around 34 lakh tonnes of sugar equivalent is estimated to get diverted into ethanol production, the pressure on the sugar mills to immediately contract for further exports is less. Therefore, it seems that the sugar mills will wait for an upward revision of the global prices to around 21 cents or more.

The Oil Marketing Companies have invited bids from ethanol manufacturers for ethanol supply year 2021-22 (December-November) in the end of October 2021, for 459 crore litres for the targeted 10% ethanol blending with petrol for the country as a whole.

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