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Informist, Wednesday, Jun. 25, 2025

 

--Govt official: July sugar sales quota announcement likely Thursday

--Govt official: Mills sought OK to roll over unsold June sugar sales quota

--CONTEXT: Mkt pegs 150,000 tn unsold sugar with mills from Jun sales quota

--Trade sources:See govt setting Jul sugar sales quota 2.2 mln tn-2.3 mln tn

 

By Afra Abubacker 

 

NEW DELHI – With sugar sales slowing down and market entering a lean demand phase, India's sugar industry expects the government to set sales quota for July at 2.2 million tonnes-2.3 million tonnes, lower than 2.4 million tonnes in July last year. The government is likely to announce the quota on Thursday.

 

In June, mills were allocated a sales quota of 2.3 million tonnes. However, trade sources say that a significant portion of this quota remains unsold. As the month draws to a close, over 150,000 tonnes is estimated to still be in mill stock, according to market estimates. The early arrival of the monsoon, fewer days of heatwaves, and sluggish offtake from bulk buyers have all contributed to the buildup in unsold stock.

 

Though mills are having a difficult time meeting June sales quota, they are not willing to lower their rates as prices are already at relatively low levels, according to traders. Bulk buyers are in a wait-and-watch mode, and mills are not keen to sell further at subdued prices, they added.

 

Several mills have requested the government to allow them to carry forward the unsold quota from June to July, but there are some industry voices against it. "Extension is neither fair nor equitas. It benefits speculators who chose not to sell, at the cost of those who complied with the government quota," said G.K. Sood, the chairman of MEIR Commodities. "The person who did not sell took a business decision. They did not like the prices and decided not to sell. It is no calamity," Sood added, hoping the government does not grant mills' requests for a rollover.

 

A senior government official confirmed that the extension request has been received, but said a final decision is pending. Though quota deviations are not unusual, the government had expected the June allocation to be largely met as it was lower than last year's 2.55 million tonnes.

 

Traders report that mills in Uttar Pradesh have more unsold stock than those in Maharashtra. "Demand is weak in Uttar Pradesh, and mills are struggling to meet their quota," said Naresh Gupta, a trader based in north India. He expects the July quota to be between 2.1 million tonnes-2.2 million tonnes, while Mukesh Kuvadia, secretary of the Bombay Sugar Merchants Association, pegs it slightly higher at 2.25 million tonnes-2.30 million tonnes. When asked for any indications of July sales quota, the official declined to comment. 

Sugar prices are expected to come under pressure if the quota is set higher than anticipated, said traders. Ex-mill sugar prices are currently hovering around INR 3,780–INR 4,050 per 100 kilogram in Maharashtra and INR 3,830–INR 4,000 per 100 kg in Uttar Pradesh, traders said. Despite a sharp 18% on-year fall in estimated sugar production at 26.1 million tonnes for 2024-25 (Oct-Sept), prices have remained largely stable due to sluggish demand and ample carryover stocks. 

"July (sugar) demand is weak. There is monsoon and mango season. Some sweet demand is met by mangoes," Sood said. Typically, sugar demand from soft drink makers and ice cream manufacturers declines with the fall in temperatures. 

"Compared to last year, summer sales this year are clearly lower," the government official said, though he noted that no single factor can fully explain the trend. Industry officials attribute it to a high base last year, when the government had released higher quotas to check sugar prices during an intense summer and the General Elections last year. 

Additionally, sugar smuggling to Nepal and Bangladesh inflated last year's domestic dispatches. Though exports were technically banned, these unofficial exports were leaking from domestic sales, distorting the domestic quota. 

This year, the Centre has allowed exports of 1 million tonnes, of which 516,782 tonnes had been shipped by Jun. 6. The industry expects total exports for the season to fall short of the quota, likely closing around 800,000 tonnes by the end of September.

In 2023–24, mills had dispatched around 29.0 million tonnes of sugar domestically. This year, projections indicate a decline to around 28.0 million tonnes, reflecting weaker sugar demand. The government sees closing stocks at 5.0 million tonnes--sufficient for two months of consumption needs--by the end of September. This, it believes, leaves the market well supplied until the new crushing season picks up pace in November.

 

As the monsoon activities advances and the market adjusts to softer demand, the market will closely watch out for July sugar sales quota. They will also keenly check the government's stance on rollover requests for unsold quotas.  End

 

Edited by Akul Nishant Akhoury

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