The Indian Sugar Mills Association (Isma) on Tuesday revised the country’s sugar production downward to 25 million tonnes (mt) for the 2010-11 season due to late rain in Uttar Pradesh, the second biggest sugar producer in the country
“We estimate sugar output to be 25 mt, as against 25.5 mt projected at the beginning of the season,” Isma President Narendra Murkumbi said.
Sugar output in Uttar Pradesh is lowered to 6.4 mt from seven mt due to late rains, while in Maharashtra, the country’s biggest sugar, it is kept unchanged at 9.4 million tonnes, Isma said.
However, the revised estimates are slightly higher than the government’s projection of 24.5 mt for the 2010-11 season (October-September).
According to Isma, the country’s sugar demand is expected to be 22 mt this year. “The quantity of sugar released in February is also in excess, which means that the total off-take in the domestic market will not be more than 22 mt,” Murkumbi said. On the possibility of sugar exports, he said, “The government should allow export of 500,000 tonnes of sugar under the open general licence (OGL) scheme, as this will help mills to improve their finances.”
“The cash-flow situation of mills is getting strained. They will not be able to sustain as stocks are building up. One million tonne can be easily exported under OGL, as there is a surplus of three million tonnes this year,” he said.
He also mentioned India has a export window open between February and mid-April. Thereafter, the Brazil crop is expected to enter the market.
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Currently, government has kept on hold export of 500,000 tonnes of sugar under OGL in the wake of high inflation.
On sugar price trend, Isma observed that the fall in wholesale prices is not being reflected in the retail market, where the sweetener is available at Rs 30-32 a kg.
“Difference between ex-factory price and retail price is widening,” Murkumbi said. The ex-factory price of sugar has declined by Rs 200 per quintal in the last few months. “It is likely to fall further due to surplus production this year and an expected healthy crop for the next season,” he said.