Sugar production estimated at 317 lakh tonnes in 2023-24, prices to remain high
In several major sugarcane producing states of the country, low monsoon rainfall due to El Nino factor has had a direct impact on sugarcane production. The sugar season will start late this year. Due to this, sugar production in the current crushing season (October 2023 to September 2024) is estimated to decline by nine lakh tonnes from the previous season to 317 lakh tonnes. In such a situation, it is almost certain that there will be a decrease in the supply of sugarcane to the sugar mills. Due to the possibility of sugar prices continuing to remain strong, there will be competition among sugar mills for sugarcane
In several major sugarcane producing states of the country, low monsoon rainfall due to El Nino factor has had a direct impact on sugarcane production. The sugar season will start late this year. Due to this, sugar production in the current crushing season (October 2023 to September 2024) is estimated to decline by nine lakh tonnes from the previous season to 317 lakh tonnes.
In this production estimate made by the sugar industry, less rainfall due to El Nino has been cited as the main reason for sugarcane production.
Sugarcane production is expected to decline in Maharashtra, one of the two largest sugar producing states in the country. At the same time, the industry has estimated reduction in sugarcane production in Karnataka also.
In such a situation, it is almost certain that there will be a decrease in the supply of sugarcane to the sugar mills. Due to the possibility of sugar prices continuing to remain strong, there will be competition among sugar mills for sugarcane.
Whereas in the domestic market the ex-factory price of sugar is between Rs 3600 to Rs 3870 per quintal, in the retail market the price is running at Rs 43.90 per quintal.
According to sugar industry estimates, after domestic consumption of 278 lakh tonnes, the sugar stock at the end of the current season is likely to be 97 lakh tonnes. The sugar stock at the end of the last season (2022-23) stood at 58 lakh tonnes, which is the lowest in five years.
To keep prices under control, the government has given permission to sugar mills to sell the October quota early. For this, a quota of 13 lakh tonnes of sugar was issued. According to sources, additional quota will be issued to sugar mills for October.
Based on the current production status, the industry will have about 30 lakh tonnes of sugar for export. But any decision on exports is likely to be taken only after assessing the production situation in January-February, 2024.
The sugar industry is also in favour of waiting till February for export approval from the government. At present the export of sugar is in the restricted list. Last year 63 lakh tonnes of sugar was exported from the country. But the government did not release the quota later. The notification to place sugar exports in the restricted list is expiring on October 31, 2023.
According to sources, the government can extend this notification till October 31, 2024. This would mean that there will be no ban on export and if there is excess sugar, the government can take a decision regarding export after February 2024.
At the same time, sugar prices remain quite high in the international market. These prices are FOB (India) price of $691 per tonne for London White i.e. Rs 5420 per quintal and 25.93 cents for New York Raw which comes to Rs 4950 per quintal FOB from India. That is, at this time the price of sugar remains very attractive for export from India but at present export is not possible and the entire focus of the government is to control the prices in the domestic market.
Although ex-factory prices have come down slightly in Maharashtra in the recent past, there has been no reduction in prices in Uttar Pradesh.
In 2022-23, sugar production was 326 lakh tonnes and consumption was 275 lakh tonnes. The stock at the end of the season stood at 58 lakh tonnes. This year 63 lakh tonnes of sugar was exported from the country. In 2021-22, sugar production was 357.60 lakh tonnes while domestic consumption was 273.30 lakh tonnes. The outstanding stock was 70 lakh tonnes. In 2021-22, sugar export from the country was 110.70 lakh tonnes.
As far as the current season (2023-24) is concerned, domestic consumption is estimated to be 278 lakh tonnes. In case of no export, the closing stock of sugar is estimated to be 97 lakh tonnes at the end of the season. But the exact status of production will be clear only by February, 2024.
