Sugar prices have come under pressure domestically and this after the December quota has seen an increase by the government. The increase in sugar quota is to provide liquidity to the on-going crushing season so that the mills can pay up to the farmers.
However, the export side of the business seems to be in for an easier time in the coming months. Abinash Verma, Director General, ISMA, told CNBC-TV18, “We expect that the world prices should move up from the later part of November. Now that Brazilian production is over, the world is looking at Indian sugar and therefore the world prices have to move to such a level to attract Indian sugar into the international market. I would believe that Indian has an opportunity to export sugar from hereon, from December to April. So we have almost 4-5 months period where the world will find Indian sugar attractive."
The sugar output number that has come from the government is 27.3 million tonne for 2019-2020. Commenting on this, Verna said, “As far as the government numbers are concerned 27.3 lakh tonne, I don’t think they have accounted for the diversion of sugarcane juice and B-heavy molasses into ethanol and the consequent reduction in the sugar production. Our estimation of production was 26.85 lakh tonne; 26.8 lakh tonne."
Verma does not make much of the talk about pressure on sugar prices, He said, “If you really see the total consumption of the sugar in the country, for 12 months would be about 26 million tonne and if you simply divide it by 12 it should come to about 21-22.5 lakh tonne every month. So 21.5 lakh tonne of the sale in December is certainly not going to put any pressure on the prices.”