High international prices, the sugar industry hopes for a good export season after more than 4 years

The Indian sugar industry is optimistic about good progress in international markets in the coming 2021-22 season, as world prices are on the rise.

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

Speaking to The Indian Express, Verma said the current price of 20 cents / lb for raw sugar translates to an ex-works realization of Rs 3,100-3,150 / cwt for raw sugar.

The cost of producing raw sugar is low and current prices are sufficient for millers to export their stock at a profit. “This award is particularly useful for millers in northern Karnataka and Maharashtra, states that are connected to port cities. Prices need to cross the 21 cents / pound mark for factories in northern India to fully enter export markets, ”he said.

Raw sugar prices hit that bar after four and a half years, which has rekindled enthusiasm in the industry.

Factors in other sugar-producing countries – a drought in Thailand and the diversion of cane for ethanol production in Brazil – have left Indian millers with good export margins. In fact, the millers had taken advantage of the General Open License (OGL) and exported sugar without taking advantage of the government subsidy.

The industry is convinced that thanks to the bullish exports, the opening stock for the new season would be lower than the surplus of 100 lakh tonnes of the last season. Currently, many Maharashtra millers are trying to renegotiate their previous contracts at higher prices, industry insiders have said.

In the event that the current diversion to ethanol continues in Brazil, the Indian sugar industry will be able to export around 60 tonnes lakh without any government subsidy. However, in the event that international prices fall, government subsidies may be needed to reach these levels.

“In such cases, the export of around 30 lakh tonnes will be done without a subsidy,” Verma said.

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

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Rachel J. Bradford