The prospects of sugar companies have brightened with the sharp rise in international prices of raw sugar to above $430 a tonne against $340 a tonne in February.
The steady spike in prices was aided by 7 per cent fall in sugar output in south central region of Brazil between April and July.
This is expected to pull down global surplus in the ongoing sugar season 2021-22 underpinned the price rally in past few days.
Direct beneficiary
Indian sugar industry can turn out to be a direct beneficiary.
Sabyasachi Majumdar, Senior Vice-President, ICRA, said firm global prices and a wider export market to cater, especially neighbouring countries, amid rising ocean freights, container shortages and port closures auger well for the industry.
The development will help Indian sugar companies reduce their inventory as they stare at sugar production of about 31 million tonnes after diverting enough quantity for ethanol production. It will improve cash flow and reduce debt.
Brazil has progressed over half way through the crushing season with decline in sugar production.
Demand-supply balance
Anupama Arora, Vice-President, ICRA, said the government subsidy has made exports viable for India which aided the economy to maintain the domestic sugar demand-supply balance.
However, the recent rally in prices have made exports feasible even without subsidy, Arora added.
With exports under open general licence already getting contacted, export prospects look promising for upcoming sugar season even if the subsidy moderates from current levels, she said.
| Date: | 20 Aug 2021 |
| Source: | The Hindu Business Line |
| Reporter: | BUREAU |
| News ID: | 49989 |
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