Monthly Prices Movement

  • Sugar prices witnessed positive trend in the major markets across the country during the month mainly supported by strong demand from bulk consumers for the festive season.

  • Prices of the sweetener in India have been on the rise for the last six months due to expectations of a sharp fall in output, both in domestic and international markets next season.

  • The Sugar price index of the Food and Agriculture Organization of United Nations has hit its highest level since October 2012 during the month.

Ground Report

  • India's Sugar production estimate for the 2016-17 marketing year has been revised upward by the industry body Indian Sugar Mills Association (ISMA) by 0.1 million tone to 23.37 million tonnes during the season which is starting in October. The estimate is still 7 percent lower than previous year due to low acreage.

  • India’s production of Sugarcane for 2016-17 is estimated at 305.25 million tonnes which is lower by 46.92 million tonnes than the last year’s production of 352.16 million tonnes, as per the first advanced estimates of the government.

  • India may not have to import sweetener as the country has enough stock to meet domestic demand as Sugar carry over stock of 7.5 million tonnes from 2015-16 season and expected Sugar production of 23.4 million tonnes in 2016-17 will be enough to meet the domestic demand of about 25.6 million tonnes in the next season, as per ISMA.

  • Sugar Cane acreage of the country is estimated at 4.99 million hectares, which is about 5 percent less than 2015-16 season and low Sugar output is expected in major producing regions of the country during 2016-17 marketing year.

  • Sugar production in Maharashtra is estimated at 6.27 million tonnes while production in Uttar Pradesh is estimated to rise to 7.66 million tonnes. Karnataka's Sugar output is pegged at 3.19 million tonnes and it is estimated that Tamil Nadu output will increase by 12 percent to 1.56 million tonnes.

  • India is expected to produce 25.1 million tonnes of Sugar in 2015-16 season ending this month, which is lower than previous year production of 28.3 million tonnes.

  • Sugar millers of Indian state of Maharashtra have expressed their inability to maintain the norms of stock limit. According to government sources, there are still about 40 Sugar mills from Maharashtra which have more than 37% stock of Sugar.

  • Sugar production of Tamil Nadu in the ongoing season is to be at a low of about 1.3 million tonnes which is less than half the installed production capacity as 2015-16 season comes to an end this month.

  • Maharashtra, which contributes a third of the country's Sugar production, expected to see a 35% drop in its output during crushing season for 2016-17 that begins in November.

Policies

  • India government has decided to restrict the Sugar stock of mills in the country to 37% of the total production by September-end and 24% by October end.

  • Government mill stock holding targeted at 37% till September end and 24% till October end likely to be extended by 15 days up-to 15th October/15th November.

  • The mandatory export quota will not be included in this stock limit imposed by the government. This would push the mills to sell more Sugar in the retail market and the excess supply is expected to keep the prices under control.

  • A six-month investigation has been opened by China regarding the country's record-breaking Sugar imports at the request of local producers. The import growth during the period from the start of 2011 through the end of March 2016 will be focused by China during the investigation.

Global

  • World Sugar production in 2016-17 is estimated a deficit of 7.05 million tonnes, one of the highest shortfalls on record by the International Sugar Organization (ISO).

  • The ISO expects world Sugar production will rise by 2.17 million tonnes in 2016-2017, but the improvement will not be enough to compensate for the increased demand for Sugar.

  • World Sugar demand is forecast to rise by 3.5 million tonnes to 175.1 million tonnes in the season in 2016-17, as per ISO.

  • World Sugar production deficit is estimated to increase by 570,000 tonnes to 6.45 million tonnes in 2016-17, according to Platts report.

  • The Sugar deficit in the 2016-17 crop year had already lifted by the Rabobank to 7.90 million tonnes which is an increase of 5.90 million tonnes. The International Sugar Organization, in its first forecast for the 2016-17 season expects global Sugar deficit of 7.05 million tonnes.

  • Brazil exported 2.964 million tonnes Sugar including 2.228 million tonnes of raw and 0.736 million tonnes of refined Sugar in August 2016, according to official reports.

  • Between January and August 2016, Brazil has exported 18.374 million tonnes of Sugar for US$ 6.12 billion, according to Brazilian Ministry of Development, Industry & Trade (MDIC) data.

  • Russia's Sugar production is estimated at 6 million tonnes in the season 2016-17 (August-July), 0.8 million tonnes up from corresponding year-ago Sugar season.

  • Sugar imports of China increased sharply by 30.7% in August to 360,000 tonnes, as per customs data. Imports for the first eight months of 2016 are down 31 percent year-on-year at 2.1 million tonnes.

  • China is expected to release 2 million tonnes of more Sugar from its States stock. Currently the country is holding about 7 million tonnes of Sugar in its State Stockpiles.

  • Even though the overall imports by China have lowered this year due to high prices, the purchase of Sugar during the second quarter when the price were low has boosted arrivals into the country in recent months.

  • Imports of Sugar by China is expected to drop further as price of Sugar is increasing and the much-anticipated release of Sugar by China's state reserves would also cut down the imports.

  • Sugar production of US for the fiscal year 2016/17 is expected to increase 63,904 short tonnes, raw value (STRV) to 9.272 million, according to USDA’s National Agricultural Statistics Service (NASS) report.

  • Beginning stocks of US Sugar for 2016/17 is expected to increase by 70,951 STRV due to changes made to 2015/16 total supply that flowed into the ending stock estimate.

Outlook

  • Indian Sugar Industry is now exhibiting signs of complete turnaround with surging prices and depletion in buffer stocks due to decrease in global as well as domestic production and steady growth in consumption.

  • Domestic Sugar prices likely to remain firm in the next 3-4 quarters, given the tight domestic stock situation.

  • Supply of Sugar in physical market will be higher in the following days as the deadline for Sugar mills to meet the stock limit is nearing. India has come out with a directive on September 8 which allows the mills to keep only 37% of their stocks by September end and 24% by October end.

  • Further increase in prices of Sugar would depend on expectations of production during current Sugar year, Sugar mills' own actions on supplies which depends upon their inventory-holding capacity, and government action on price control measures.

  • Imposition of export duty and stock holding limit measures may dampen prospects of a further significant price rise.

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