In a recent advisory note, the government asked sugar mills to take an immediate call on signing export contracts to take advantage of high international prices as it expects the closing sugar stocks in the ensuing sugar season to remain historically high.
“As per the reports coming from international markets and trade sources, production in the current sugar season in Brazil has been badly affected by extreme weather conditions caused by drought followed by frost, indicating a global sugar deficit. The next sugar season in Brazil would commence in April 2022. Market sources said sugar production in Thailand is likely to remain high in comparison to previous years; but Thai sugar would arrive in the market only after January, 2022. Thus, Indian sugar mills have a good opportunity to export their surplus sugar between the period from August 2021 to January 2022,” the note said.
Prakash Naiknavare, managing director, National Federation of Cooperative Sugar Factories said, “In the advisory issued by the government following the spurt in international sugar prices, there is no mention about export subsidy. Hence, we think that the government may like to wait till December to monitor how the international prices help to push up Indian exports.”
Instead, the industry is hoping that the ethanol prices may go up in December 2021, when the new Ethanol Year begins. “Ethanol prices are linked with the price of sugar cane, which was increased in the previous year and is again likely to be revised upwards next year. We expect the ethanol prices to increase by about Rs 1.50 to Rs2/Ltr in December when new ethanol year begins,” said Naiknavare.
The government has promised that the sugar mills which export sugar and divert sugar to ethanol would also be given incentive in the form of additional monthly domestic quota for sale in the domestic market.
Industry sources, who did not want to be identified, claimed that the government may also tweak the monthly quota in order to keep the domestic sugar prices high.