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Informist, Wednesday, Aug 21, 2024

 

By Taniva Singha Roy

 

MUMBAI – The Centre is likely to set sugar sales quota for September around 2.5 mln tn, higher than 2.2 mln tn for August and 2.4 mln tn in July, market participants told Informist. Keeping in view firm demand due to a line-up of festivals in the coming months and seasonal demand, the sales quota is going to be higher than that of July and August, said Semal Sudhir Jain, secretary at Kolhapur, Karad, and Sangli Sugar Merchant Association.

 

The government may announce the September quota towards the last week of August. 

 

In August, the government had set a sales quota of 2.2 mln tn, down 8.3% on month, which the market players had deemed to be insufficient to meet demand. However, owing to carryover stocks from July, the mills were left with abundant stocks even amid poor demand from bulk manufacturers of sugar such as ice-cream and cold-drink manufacturers, due to heavy rainfall in some parts of the country, said Naresh Gupta, a local trader from north India. The government had, in July, granted an extension to mills to meet the sales quota for the month till Aug 15.

 

The Centre had slashed the August sugar sales quota for Maharashtra and Uttar Pradesh by 14% and 6%, respectively, on a month-on-month basis. The quota for Maharashtra and Uttar Pradesh for August were 776,197 tn and 762,371 tn, respectively, according to a notification by the government's Food and Public Distribution Department. For Karnataka, another major producer of the sweetener, the sales limit was cut by just 2% from the last month to 283,902 tn.

 

 

Prices of sugar have been on a significant downtrend for the past few weeks, and the trend is likely to continue for rest of the month, said Naresh Gupta. In the key markets of Uttar Pradesh, the sweetener rates fell by about 120–130 rupees per 100 kg, while in Maharashtra, prices fell by about 80 rupees per 100 kg, after rising by about 150 rupees per 100 kg weeks after the release of the sales quota for August. 

 

However, the trajectory of prices is likely to reverse in September and be on an upward trend, as demand for the sweetener is likely to be firm ahead of festivals, said Jain. 

 

The government fixes the maximum quantity of sugar available for sale every month to support prices and help mills clear the arrears of sugarcane farmers. As of Apr 30, mills in the country had produced 31.4 mln tn sugar in the 2023-24 (Oct-Sep) season, according to the Indian Sugar & Bio-energy Manufacturers Association. Although crushing normally gets over by April-end, the association expects an additional production of 500,000-600,000 tn of sugar from Karnataka and Tamil Nadu, taking the total output in the country to around 32.0 mln tn this season. According to ISMA, mills in Karnataka and Tamil Nadu will conduct crushing operations during the special season in Jun-Sep.

 

India's sugar production in the current season ending September is seen at 32 mln tn, down from 33.1 mln tn last year, according to the National Federation of Cooperative Sugar Factories. 

 

The Indian Sugar Mills & Bio-Energy Manufacturers Association's preliminary estimate of gross sugar output in the 2024-25 season starting October is 33.31 mln tn, down 2% from 33.99 mln tn last season.  End

 

Edited by Akul Nishant Akhoury

 

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