Monthly Prices Movement

  • Sugar prices witnessed positive trend in the major markets across the country during the month of October on high demand due to festival season in the country.

  • Supply of Sugar from mills was in good swing in the markets, as the deadline is nearing to reach the stock limit imposed by the government.

  • Sugar prices have increased nearly 40% on year on year in the wholesale markets of the India. Price of Sugar has been on the rise for almost past seven months on expectations of a sharp fall in output in domestic and international markets next season.

Ground Report

  • India's 2016-17 Sugar season (October-September) has started with estimated carryover stocks of 7.5 million tonnes. The domestic consumption is expected around 26 million tonnes.

  • India's Sugar production in 2016-17 season that started from October is expected to around 23.2 million tonnes as against 25 million tonnes of 2015-16 due to drought in major growing states of Maharashtra and Karnataka.

  • Sugar stock available in India is sufficient to meet the domestic requirement of the country, as per government sources. The government has been constantly monitoring and taking action wherever necessary to remove any kind of regional imbalances causing Sugar price increase, they added.

  • The ministry said that Sugar prices have been almost stable since last six months due to the steps taken by the government. As of now, no abnormal increase of price is observed and the price behavior is quite normal.

  • U S Department of Agriculture has revised India’s raw Sugar production below 6% to 23.9 million metric tonnes for 2016-17 season.

  • As per USDA, even though the Sugar production is higher in Uttar Pradesh, lower than anticipated Sugar production from Maharashtra and Karnataka will further push overall production levels below last year.

  • India's overseas purchases of Sugar may total 1.25 million metric tonnes in the year started on 1 October, the most since 2009-10.

  • The government of Maharashtra has rescheduled the date to start the Sugarcane crushing season to November 5 from earlier December 1. The decision was taken by the state cabinet as delayed start of crushing season would reduce cane weight, impacting Sugar recovery and finances of factories.

  • It is expected that about 150 mills including 80 cooperative mills and 70 private mills will participate in the coming crushing season, against 177 (99 co-op and 78 private) in 2015-16 in Maharshtra.

  • Sugar production of Maharashtra is likely to fall to the lowest in 6 years in 2016-17 Sugar season. The state is expected to produce 5 million tonnes of Sugar during the period due to reduction in Sugarcane area and availability of the crop for crushing.

  • Production of Sugar in Maharashtra is expected no more than five million tonnes, against 8.41 mt in 2015-16 on low acreage.
    Area under cane production in Maharashtra in the current season fell to 633,000 hectares, from 987,000 hectares last year and availability of cane for crushing is expected at 49.3 million tonnes of cane against 74.3 mt during the previous year.
    India, the world’s second largest Sugar grower in the world, could export only 1.6 million tonnes of Sugar in 2015-16 as the country consumes most of its domestic output.

Policies

  • India government has approved the extension of stock limit on Sugar by a further six months, as per a government release. The time period has been extended from October 29, 2016 to April 28, 2017 aimed at controlling the prices and avoid hoarding.

  • Sugar mills in Maharashtra gets high court relief in the case of maintaining the stock limits imposed by the government. The Bombay high court have directed not to take any prosecution action against Sugar mills for maintaining stocks above the Centre’s prescribed limits to the central and state governments.

  • Sugar standards for the Sugar season 2016-17 which spans between October 1, 2016 and September, 30, 2017 has been released by the committee of experts constituted by the government of India under the chairmanship of National Sugar Institute (NSI)-Kanpur.

  • India's Cabinet Committee on Economic Affairs (CCEA) has approved a new mechanism for revision of Ethanol prices for supply to public sector oil marketing companies (OMCs) to carry out the Ethanol Blended Petrol (EBP) programme.

  • India will reduce the price of Ethanol for blending to Rs 39 per litre, excluding taxes, from December 1. The current level of prices, inclusive of taxes, is Rs 48.50-49.50 per litre.

  • China has decided to release the first batch of Sugar reserves this year, as per the country's top economic planner. The move of the country is to stabilize supply and prices of Sugar. China will sell 350,000 tonnes of Sugar from state reserve at CNY6,000 (US$900) per tonne, as per National Development and Reform Commission.

Global

  • Brazil Sugar exports is expected to top 27 million tons this season despite having a disappointing cane harvest, as the mills prefer Sugar over Ethanol. Brazil's total Sugar production in 2016/17 hit a three-year high of 37.78 million tons.

  • The Brazil Centre South Sugarcane production has been revised downward to 608 million tons, down 22 million tons from the previous estimate due to drier weather early in the season, as per USDA.

  • Brazil shipped 21.56 million tonnes of Sugar during early nine months of 2016, up 37.58% compared to export volume in the corresponding year-ago period.

  • Sugarcane crushing in the centre-south (CS) region of Brazil is expected at 597 million tonnes in the current 2016/17 season, according to Brazilian consultancy group Datagro.

  • Sugar imports of China in September reached the highest level since December at 500,000 tonnes, according to Customs data. But the imports during the last month marked a fall of 24 percent year on year due to the high global prices.

  • China’s MY 2016/17 Sugar production is expected to rebound slightly from the 15-year low of 2015/16, as high domestic prices have encouraged expanded Sugar area. China will remain the world’s largest importer, reported the U.S Department of Agriculture (USDA).

  • Thailand Sugar production estimated lower in 2016/17 due to the recent drought in the country. The preliminary forecast for the current 2016/17 Sugar cane crop is t 91.1 million tonnes, which is down by 3 million tonnes from the previous 2015/16 crop, according to Thai Sugar Millers Corporation Ltd (TSMC).

  • The Sugar-crushing season of Thailand normally runs from November to April and the start of the 2016/17 crop is set for Dec 1. Thailand produced 9.7 million tonnes of Sugar from 94 million tonnes of Sugar cane during 2015/16.

  • Ethanol imports of China fell by 74% month on month to the lowest level in a year at 10,121 cu m in September, according to data released by the General Administration of Customs. Sharp drop in denatured Ethanol imports has attributed to the decline in September which fell to 10,097 cu m in September, down 73.75% from August.

  • Ethanol exports of US in August reached 77.846 million gallons, as per US Census data. The export is up 12.3%, or 8.551 million gallons compared to the previous month. August export of Ethanol is the highest volume since April.

Outlook

  • The festival season in the country has come to an end and the prices are likely to cool down in the coming days, but major fall cannot be expected as the estimate for Sugar production is low globally.

  • Reports of extension of storage limit on traders till last of April of next year is likely to add bearishness to the market as government decided to impose stock limited on traders for another six months.

  • Crushing activities are likely to commence in Uttar Pradesh and Maharashtra in coming days which may keep supply higher in physical market and may control sharp rise in prices.

  • The stock limits on Sugar traders were imposed for six months ending October. Traders were allowed to hold stock of up to 10,000 quintals in Kolkata and 5,000 quintals in other parts of the country. This is expected to help in the efforts being taken to improve the availability of these commodities to general public at reasonable rates, and control the tendencies of hoarding and profiteering.

  • Government has already tried all possible options to check Sugar prices and last option is to reduce import duty on Sugar so it may be considered sooner or later. Stability will be observed in Sugar market if import duty is slashed.

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