Sugar exports looking up, contracts worth 2.5 million tonnes signed

Domestic industry eyeing total sugar exports of 5 MT this season

Even as domestic sugar production in the current 2019-20 crushing season fell by 30 per cent to 7.8 million tonnes (MT) till December 31, 2019 compared to 11.2 MT during the same period in 2018, mills have signed sugar export contracts worth 2.5 million tonnes so far.

Quoting market information, Indian Sugar Mills Association (ISMA) said on Thursday that sugar export contracts to the tune of 2.5 MT had been signed by mills against their respective maximum admissible export quantity (MAEQ).

In fact, the Centre is in the process of reviewing actual exports from mills against MAEQ during October–December 2019 quarter, and as already announced in the policy, reallocating the un-exported MAEQ to those mills, which have already exported and are willing to take additional quota beyond their MAEQ.

The reallocation of un-exported MAEQ/additional allocation of quotas to the willing sugar mills will help in achieving the MAEQ target during 2019-20.

Meanwhile, ISMA director general Abinash Verma told Business Standard that while the export situation for the sugar industry had so far been positive, it would be difficult to forecast about the same going forward.

Earlier, he had noted if the global sugar market matrix remained favourable, there was a potential for the Indian sugar exports touching 5 MT this season. The major offshore destinations for Indian sugar are Iran, Sri Lanka, Afghanistan, African countries etc.

At present, 437 mills are in operation across India, producing almost 7.8 MT of sugar compared to 507 mills generating output of 11.2 MT during 2018-19 crushing season, a shortfall of about 3.4 MT.

Maharashtra, the country’s second largest sugar producer after Uttar Pradesh, witnessed an inordinate delay in the start of crushing owing to inundated fields in cane growing areas following heavy rainfall and floods, apart from elections.

In Maharashtra, 137 mills have produced 1.65 MT of sugar vis-a-vis 4.45 MT output logged by 187 units last year. While sugar recovery also fell from 10.5 per cent to 10 per cent, it is expected to rise in the coming weeks.

In UP, 119 mills produced 3.3 MT of sugar till December 31, 2019, compared to 117 units producing 3.1 MT in the corresponding period in 2018. UP is estimated to produce 12 MT of sugar or 45 per cent of the country’s estimated output in 2019-20 pegged at 33 MT. About 20 mills are also diverting ‘B’ heavy molasses for ethanol production.

Meanwhile, 63 mills in India’s third largest sugar producer Karnataka have produced 1.63 MT compared to 2.1 MT by 65 units last season.

In Gujarat, 15 mills are operational and they produced 265,000 tonnes of sugar till December 31, compared to 16 mills generating 429,000 tonnes in 2018.

In Andhra Pradesh and Telangana, 18 mills have generated 96,000 tonnes of the sweetener, while in 2018, 24 mills were in operation and clocked more than 100,000 tonnes.

In Tamil Nadu, 16 mills are in operation producing 95,000 tonnes compared to 151,000 tonnes produced by 27 sugar mills in 2018.

The mills in Bihar, Haryana, Punjab, Uttarakhand and Madhya Pradesh have so far produced sugar totalling 233,000 tonnes, 135,000 tonnes, 160,000 tonnes, 106,000 tonnes and 100,000 tonnes respectively.

Based on satellite images of the cane growing area which is yet to be harvested, trend of recovery, yield and drawal percentage achieved so far, ISMA will come out with its second advance estimate of sugar production for 2019-20 SS in February 2020.

Meanwhile, ex-mill sugar prices have remained steady in the range of Rs 3,250-3,350 per quintal in Northern India and Rs 3,100-3,250 in the Southern Region.

Since, the Centre did not increase the cane's Fair and Remunerative Price (FRP) for 2019-20 and state governments of UP, Uttarakhand and Punjab also decided against hiking the State Advised Price (SAP), the ex-mill prices have remained stable, thereby enabling the mills to be in a better position to pay the farmers on time.