India's sugar consumption might touch 30 million tonnes next season

The country’s net sugar consumption might touch an unprecedented 30 million tonnes in the next 2024-25 season (October to September) on the back of a steady 2.2 per cent year-on-year growth rate, market participants said.

The net sugar consumption is consumption without accounting for ethanol diversion.

India’s annual sugar consumption growth rate of 2.2 per cent is significantly higher than the world average which is closer to 1 per cent.

In the ongoing 2023-24 sugar season that will end in September, domestic sugar consumption touched a new record of 29 million tonnes on the back of strong demand due to intense heat wave and also the ongoing elections.

During elections, consumption of beverages goes up manifold, while heat waves pushes up demand for soft drinks and confectionaries.

The latter comprises over 60 per cent of the total demand for sugar annually in the country.

In the 2023-24 season, the Central government released 19.6 million tonnes through the mills between the October to May months through its regulated release orders.

This is almost 9 per cent more than the sugar released in the market during the same months of last (2022-23) season. This also means that roughly there has been a nine per cent rise in sugar demand in the first eight months of the 2023-24 sugar season.

Therefore, net sugar production in 2023-24 is projected at 32 million tonnes, while consumption is estimated at 29 million tonnes.

The average ex-mill price of sugar so far in the season is around Rs 3,750 per quintal, which is higher than the average price of last season.

This is despite the fact that sugar mills are anticipating a nine million tonnes closing stocks of sugar due to discontinuation of exports and lower diversion towards ethanol.

“The prices have stayed firm due to speculative sentiment and strong demand, while next year we do expect some moderation in demand as elections won’t be there so the spike might not be there, but growth will be there,” another official explained.

Trade sources said that in the next year (2024-25), net sugar production could be around 29 million tonnes, almost matching the estimated production.