Market prices rose on the back of lower-than-expected quotas on sugar

- After the lockdown, now that the reopening process has started, the bulk demand is expected to increase: Excellent conditions have also been created in the export sector.

The recent trends in the sugar market and industry in the country have seen a reversal. Corona's second wave saw a recent rise in domestic demand for sugar in a lockdown-like situation, while demand for sugar in bulk consumption slowed during the period, market analysts said.

However, now that the lockdown has begun to open and the process of reopening has resumed, the bulk consumption in sugar, restaurants, hotels, ceremonies etc. There is hope for growth in demand from the sector. Now that the festivals have started in the country, the prices in the sugar market have gone up. Wholesale spot prices in the Navi Mumbai sugar market were recently seen at Rs 40-50 per kg and Rs 60-900 per kg for medium-sized goods. Sugar prices have been on the rise since the announcement of the September quota.

According to sugar market sources, the government has announced a free sale quota of 4 lakh tonnes for the month of September. With the start of the festive season, the September quota was expected to be higher than this, but in fact, the quota was only announced to be 3 lakh tonnes, which was less than expected.

Market prices have also gone up as a result. The September quota was slightly higher in view of the August quota of 21 lakh tonnes, but the September quota is still low due to rising demand in the market. According to veteran sugar market traders, sugar consumption in the country usually increases in September, October and November. Given this, the September quota needs to be increased. In addition, there is talk in the sugar market that more quotas need to be given for October and November.

Meanwhile, the area under sugarcane cultivation in the country has increased slightly to around 2 to 3 lakh hectares so far this year. According to sources in the sugar industry in Tamil Nadu, sugar mills have recently been plagued by short supply of sugarcane. Consumption of installed capacity in the Tamil Nadu sugar industry has declined this year. There are about 21 to 3 sugar mills in Tamil Nadu out of which barely 2 to 3 sugar mills have been found to be functioning traditionally. The rest of the mills reported lower-than-expected production. This has also raised financial issues against the sugar mills. Such mills have also seen delays in payments to sugarcane growers.

Meanwhile, the government has been informed by the sugar industry that the floor price of sugar needs to be increased to Rs 5 per kg when the government has increased the price of sugarcane in the country. According to sources in the sugar industry, about 60 per cent of the total revenue of sugar mills comes from sugar and only 15 to 20 per cent comes from ethanol, electricity etc. In view of this, the government needs to increase the floor price of sugar. The government has recently fixed the price of sugarcane at Rs 50 per kg for the sugar season (October-September) of 2021-2. As a result, the demand from the sugar industry to increase the floor price of sugar has intensified recently.

Meanwhile, the country has recently witnessed a rise in sugar prices citing festivals, which has also boosted exports. World sugar prices have risen and this has led to an increase in overseas sugar exports from India. Sugar mills have already made deals in the world market for the export of about 3 million tonnes of sugar.

Earlier, the export target was set at 3 million tonnes, but given the changed circumstances, the country's sugar exports are now likely to exceed the target. Following the growth in refined sugar exports from the country, the government has recently instructed the sugar industry to make efforts to increase raw sugar exports. The new sugar season 2021-2 in the country will now start from October 2021 and experts are showing the possibility of higher sugar exports in this new season.

Even if government incentives are not forthcoming, exports will pick up as global prices continue to rise, market analysts say. The supply of sugar from Brazil in the world market has been less than expected. Recently, sugar exports from India, especially to Indonesia, have been on the rise. India's sugar exporters have recently made deals to export eight lakh tonnes of sugar on the route of open general licenses without subsidized sport. In addition to Indonesia, Afghanistan, United Arab Emirates, Sri Lanka v. Export deals have increased.