India’s sugar exports may fall by half on output decline in 2023-24
A projected decline in India’s sugar production in the marketing year starting October may cut exports of the commodity by half, traders said. However, local prices may not rise as sufficient stocks are available for domestic consumption, which has risen only marginally over the past few years.
India’s sugar exports touched a record 11 million tonnes in 2021-22 (October-September) after production shot up to 36 million tonnes. Output in the current year is estimated at 33 million tonnes, with exports falling to 6 million tonnes.
While the government is likely to announce the sugar export policy for 2023-24 only by January, traders and the industry are already expecting a further drop in outbound shipments.
Preliminary estimates by the Indian Sugar Mills Association (ISMA) project 36.2 million tonnes of sugar production in 2023-24. After diverting 4.5 million tonnes for ethanol production – compared with 4.1 million tonnes this year – the resulting 31.7 million tonnes of sugar will be 3 percent lower year-on-year. With domestic consumption expected at 27.5 million tonnes, there will be a surplus of 4.2 million tonnes, but not all of it may be exported.
“The total sugar production is expected to drop because of a shortfall in sugarcane in Maharashtra and Karnataka. Uttar Pradesh is, however, doing better,’’ said Praful Vithalani, chairman of the All India Sugar Trade Association. The three states account for about 80 percent of the country’s sugar output.
Wholesale prices Wholesale sugar prices have moved up over the past few months to about Rs 37 in Maharashtra and Rs 39 per kg in Uttar Pradesh, ex-mill plus GST, with sugar production expected to drop next season. Vithalani said prices usually rise during the off-season from May to October.
“The new season that usually starts in October may be delayed to November due to an additional month in the Hindu calendar as Diwali is scheduled in November second week. But the current stock of 80 lakh tonnes as on September 1 will be adequate till the end of November. We expect prices to decline by 4 to 5 percent from December,’’ he said.
ISMA forecast an over 7 percent rise in sugar production in Uttar Pradesh, the largest producer in the country, and an 8 percent drop in output in Maharashtra and a 10 percent fall in Karnataka. These figures are as of the end of July and may change in the final data expected to be released by the end of this month.
“It will be difficult to predict what the total production will be finally as August was a disaster in terms of rainfall,’’ said Atul Chaturvedi, executive chairman of Shree Renuka Sugars.
Despite higher prices locally, Indian sugar is still about Rs 25-30 per kg cheaper than in the global market because output in other producing countries such as Thailand and China has been lower. Production in Brazil, the largest sugar producer, is expected to be good. However, India may not be able to take advantage of the global situation by exporting more in the next season.
“Though we wish the export market should be open, the government is likely to curb it to keep inflation under control in the domestic market,’’ Chaturvedi said.
According to RL Tamak, chief executive officer of DCM Shriram, domestic sugar consumption has increased 2-3 percent annually in the past few years.
“Though the confectionary industry is consuming more, health awareness among the people has increased after the Covid pandemic, leading to lower intake,’’ he said.
The government is also diverting more sugarcane for the production of ethanol to be blended with petrol. Currently, ethanol blending with petrol is about 12 percent and the government is committed to raise it to 20 percent by 2025.
Diversion of sugarcane for ethanol may increase to 4.5 million tonnes this year even though sugar production is expected to decline. “Currently, the revenue from ethanol for mills is in the range of 25-30 percent. The road map for the years ahead is that it can increase to 40 percent,’’ Tamak said.
Wholesale prices are currently above the minimum selling price of Rs 31 per kg set by the government. The fair and remunerative price for sugarcane farmers was revised by Re 1 per kg to Rs 31.50 per kg for 2023-24. While this price has been revised every year, the minimum selling price has not changed in the past four years.
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