Sunday, March 18, 2018


Until Feb 28, 230.5 lakh tonne of sugar produced in ’17-18 sugar season
Tuesday, 06 March, 2018, 08 : 00 AM [IST]
Our Bureau, New Delhi
The sugar industry has produced 230.5 lakh tonne of sugar between October 1, 2017 and February 28, 2018 in the current sugar season (SS) 2017-18.

In the current season, 522 sugar mills across the country were crushing sugarcane.  As on February 28, 2018, 479 sugar mills were still working and 43 sugar mills have shut crushing operations in the current season.

There are reports that some more sugar mills would be shutting operations in the next couple of weeks.  Most of the sugar mills that have closed are from Karnataka, Maharashtra and Tamil Nadu.

The sugar industry has produced 67.88 lakh tonne more sugar than it did at the same time last year (i e upto February 2017).  However, one needs to keep in mind that last year’s sugar production was the lowest in the last 7-8 years. In SS 2016-17, it had  fallen from the normal production of 250-260 lakh tonne to only 203 lakh tonne.  Therefore, the difference, as compared to last year, seems to be large, but it needs to be remembered that the previous year, was a year after two years of drought in the western and southern parts of the country.  On the other hand, this year, the sugarcane availability is better due to better rainfall and also because sugar mills in almost all the states across the country started crushing operations much earlier and at full capacity than last year.

Uttar Pradesh produced 73.95 lakh tonne, whereas Maharashtra produced 84.24 lakh tonne and Karnataka produced 33.44 lakh tonne till February 28, 2018. While sugar mills have still not started closing in Uttar Pradesh, they have started shutting their operations in Maharashtra and Karnataka.

As compared to about 246 lakh tonne of sugar sales by the sugar mills in the previous SS (2016-17), one expects the sugar sales to be slightly higher at around 250 lakh tonne in the current season.

In February 2018, there was a substantial improvement in the market sentiments and buying interests, by both the bulk consumers as well as the domestic traders.  One expects an improvement in sugar off-take in the month of February 2018.  Therefore, the expectation of sugar sales of around 250 lakh tonne in the whole season seems reasonable.

The pipeline between the sugar mills and retail market is reportedly very thin and, therefore, with an improvement in the market sentiments, there is reportedly better buying interest for stocking purpose also.

Thanks to the government’s decision to increase import duty on sugar from 50 per cent to 100 per cent and a control on sugar sales by sugar mills in the two months of February and March 2018, there was an improvement in the sugar prices across the country by over 10 per cent.

However, after the initial increase, the sugar prices have seen a marginal correction downwards.  Nevertheless, the current sugar prices are prevailing at slightly better levels as compared to what these were in the end of January 2018.

Considering that there is reportedly a larger sugar production in the current year, as also expected in the next 2018-19 season, there is a need to export at least 15 lakh tonne in the current season itself over the next 6-7 months.

This will give extra cash flows to the sugar mills, which, in turn, will improve cane price payments to the sugarcane farmers and will reduce the cane price arrears, which is accumulating very fast to uncomfortable levels.
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