Indian sugar companies have, for the time being, shunned the lucrative export market following a nearly 10 per cent dip in international raw sugar prices.
The companies had signed most of the export contracts when global raw sugar prices were in the range of 20-21 cents per pound. With the prices now falling to around 18.6 cents, the Indian mills are not forthcoming to sign further export contracts.
Citing market reports and information from large trading houses, the Indian Sugar Mills Association (ISMA) on December 2 said, export contracts for 3.5 million tonnes (MT) have so far been firmed up in the current sugar season (Oct-Sep) 2021-22.
As a substantial quantity of nearly 3.4 MT of sugar equivalent is estimated to get diverted into ethanol production, the pressure on mills to earnestly contract for further exports is less. Therefore, the mills will await an upward revision of the global prices.
“Considering the domestic ex-mill sugar prices in the Western and Southern parts of India and the global prices of 20-21 cents per pound prevailing in the last couple of months, most of the export contracts were signed by the Maharashtra and Karnataka mills. Since the ex-mill sugar prices in Northern India are slightly higher, not many export contracts have taken place from the North,” an ISMA statement read.
It is expected the mills will enter into further export contracts only after world prices revive to 21 cents.
Meanwhile, 416 sugar mills were in operation as of November 30, 2021, producing 4.7 MT of sugar in the current season as compared to 4.3 MT produced by 409 mills in the corresponding period last year.
In Uttar Pradesh, 101 sugar mills have produced more than 1 MT of sugar, while in Maharashtra, 172 mills have started crushing operations and produced 2 MT. The higher production is because of the earlier start of crushing operations in Maharashtra and the higher availability of sugarcane in this season. Besides, crushing is in full swing in other states, including Karnataka, Gujarat etc.
The total sales in the first month (Oct) of the current season was around 2.45 MT against the domestic sales quota of 2.4 MT. Earlier, the government had increased the time period for sale for an additional quota of 250,000 tonnes which was allotted for September 2021 up to October 31, 2021.
The higher sales this year were due to the easing of Covid restrictions, higher sales quota and robust festive demand.
Meanwhile, the oil marketing companies (OMCs) have invited bids from ethanol manufacturers for ethanol supply year (ESY) 2021-22 (Dec-Nov) for 4.59 billion litres (BL) to feed the country’s targeted 10 per cent ethanol blending with petrol. The bids were opened on November 12, 2021, wherein about 4.14 BL of bids for ethanol supplies were offered by manufacturers.
Of this, 3.33 BL has been offered by the sugar industry, based on B-heavy molasses and sugarcane juice as feedstock. This is against around 2.16 BL supplied in the last ESY 2020-21. Therefore, against 2 MT of sugar equivalent diverted into ethanol last year, around 3.2 MT of sugar equivalent diversion have been offered in bids.
The OMCs have finalized and issued letters of intent for signing contracts with the ethanol manufacturers for 3.17 BL of ethanol supplies against the offer of 4.14 BL. However, the OMCs have floated a second EOI for another 1.42 BL of ethanol.