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International prices high, sugar industry hopes for good export season after over 4 years

India’s sugar industry is optimistic about a good run in the international markets in the upcoming 2021-22 season, as world prices are bullish.

If the current prices of raw sugar continue to hold or appreciate, India may end up exporting 30-60 lakh tonnes of sugar in the next season, said Abinash Verma, director general of Indian Sugar Mills Association (ISMA).

Speaking to The Indian Express, Verma said the present price of 20 cents/pound for raw sugar translates into ex-mill realisation of Rs 3,100-3,150/quintal for raw sugar.

The production cost of raw sugar is low and the present prices are enough for millers to export their stock at a profit. “This price is especially helpful for millers in north Karnataka and Maharashtra, states which have a connection to port cities. Prices need to cross the 21 cents/pound mark for north Indian mills to get wholeheartedly into the export markets,” he said.

Raw sugar prices have touched this mark after four-and-a-half years, which has bouyed the enthusiasm of the industry.

Certain factors in other sugar producing countries — a drought in Thailand and diversion of cane for production of ethanol in Brazil – have left Indian millers with good export margins. In fact, millers had taken advantage of the open general license (OGL) and exported sugar without taking advantage of the government subsidy.

The industry is confident that thanks to the bullish exports, the opening stock for the new season would be less than the 100 lakh tonnes surplus of the past few season. Currently, many millers in Maharashtra are trying to renegotiate their earlier contracts at higher prices, said industry insiders.

In case the present diversion to ethanol continues in Brazil, the Indian sugar industry will be able to export around 60 lakh tonnes without any government subsidy. However, in case the international prices fall, government subsidy might be needed to touch these levels.

“In such cases, around 30 lakh tonnes export will happen without subsidy,” said Verma.

The Indian sugar industry is in a comfortable state in terms of carry forward stock. The next season will open with less than 100 lakh tonnes surplus and the industry is expected to produce nearly 310 lakh tonnes of sugar.

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