Though the monsoon seems to have revived, until now it shows 6 percent deficiency, Kharif sowing also shows a lag of 10-11 percent year-on-year. Pulse prices have run up and so are the edible oil prices. Leaving sugar, for most other commodities like cereals, rice, edible oil, pulses, the sowing numbers are lower than the previous year.
CNBC-TV18 spoke with Atul Chaturvedi of Renuka Sugars to discuss what all this means for sowing and the prices of commodities.
Chaturvedi said as far as the sowing area of the country is concerned, north Karnataka, Maharashtra and UP have received good rains and there is no issue.
“Our back-of-the-envelope calculation tells that crops this year would be more or less like last year, in fact, marginally higher compared to last year. So, I think the sugar sector is reasonably well placed.
On prices, he said, “The Indian values are probably likely to stick around where they are because we are surplus in sugar and so do not need much of an upside in sugar prices. However, internationally, Brazil is suffering from drought like situation, Thailand isn’t doing well and international sugar prices could be much well supported.”
The biggest trouble at this point is market has gone through the roof, so India could have a situation wherein prices in consuming countries may be very high. “I have heard that in Pakistan, sugar is selling at Rs 100 per kg and in countries like Ethopia also prices are very high. So, the situation as far as sugar is concerned is a bit skewed,” said Chaturvedi.
From the Indian perspective, sugar is a sweet spot. The ethanol play continues to be strong,” he said. Talking about sugar demand, he said the demand is okay but not great. The sugar offtake has been more or less like last year, he said, adding that, “The incremental demand, which we normally used to pencil around half-million tonne annually is not there but more or less situation is at the same level.”For the entire interview, watch the accompanying video