Sugar industry can't get over that bitter feeling

As the possibility of lifting export ban on sugar is gaining momentum, so is the probability of a negligible impact on prices in the domestic market.

Market sources say on the back of prevailing low international sugar prices and high global production, exports may not come as a shot in the arm for the sugar industry.

Interestingly, the sugar industry has been crying foul over the export ban which has resulted in a fall in sugar prices in the last few months.

"Expected surplus production this year coupled with carryforward stock will be much higher than actual domestic consumption. Despite exports, we will still be left with substantial stocks which will not push prices up from the current level, " said Rajendra Shah, a Mumbai-based sugar trader.

He added that exports will be viable only when there are good international prices. India is expecting 235 lakh tonne of sugar production and the carry forward stock is around 35 lakh tonne.

The domestic consumption is stipulated at 198 lakh tonne. The country has an export obligation of 20 lakh tonne, of which 10 lakh tonne has already been shipped out.

Chandra Shekhar Nopany, vice-president, Indian Sugar Mills Association (ISMA) had said that level of exports should be increased to 40 lakh tonne from the existing 20 lakh tonne.

With crushing time nearing in October and new product expected to reach market by November, sources said wholesale prices may dip further by Rs 50 a quintal.

At present, wholesale prices across the country is in the range of Rs 1750-Rs 1900 per quintal.

The global production of sugar is expected to be around 155 million tonne against 151 million tonne last year. At the same time, global prices are on the decline.

"The international price is hovering around $365 per tonne of sugar, that is Rs 16.50 a kg, which is lower than the prevailing domestic price," said a Mumbai-based commodity analyst.

Moreover, sugar crop in Pakistan is also good this year. "There are some export opportunity to Bangladesh and Srilanka and to some extent to Middle East but those will not be big," said sources.