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As sugar cane crushing season gets underway, amid signs of a consecutive year of bumper sugar production, Indian mills want an early announcement of the export policy for the commodity.
The Indian Sugar Mills Association (ISMA) has been asking the government to announce an export policy in recent months, even as global raw sugar prices hovered around 19 cents per pound. Prices dropped to a one-year low in the last week of July 2022. ISMA says the prices have since remained volatile, hovering around 18 cents per pound.
CS Brazil is set to recover sugar production to over 36 million tonnes in 2023-24 from an estimated 33 million tonnes in 2022-23 According to industry, this sugar will hit the global market by May 2023.
Freight rates have also fallen, which will favour exports from Brazil; Thailand production is expected to increase to 11.5-12 million tonnes in the 2022-23 season.
Raw sugar futures for May 2023 can be delivered up to April 28, 2023. There is an opportunity for Indian sugar mills to export maximum quantity up to April 2023 and a single-tranche export policy is a viable option.
The industry says Indian sugar mills produce plantation white sugar, which is not in demand in the global market. Not surprisingly, raw sugar contributes around 50 per cent of total exports from India.
“With a clear export policy, mills can plan their production for the next season in advance. Mills can then enter into future contracts for March 2023 and May 2023,” ISMA stated in a recent presentation to the government.
Ethanol production
Net sugar production in 2022-23 before diversion to ethanol is estimated to be higher by about 5 per cent at around 4.1 crore tonnes, against 3.92 crore tonnes in 2021-22. In 2022-23, since the target of 12 per cent blending is expected to be achieved, about 545 crore litres of ethanol would be supplied.
Sugar diversion for ethanol is estimated to be higher by 32 per cent at 45 lakh tonnes against an estimated 34 lakh tonnes last season. But even after a reduction of 45 lakh tonnes due to diversion of cane juice/syrup and B-molasses to ethanol, ISMA estimates sugar production in 2022-23 at around 3.65 crore tonnes.
With an opening balance, as on October 1, 2022, of around 55 lakh tonnes, sugar production for 2022-23 is estimated at around 3.65 crore tonnes; after domestic sales of around 2.75 crore tonnes, nearly 90 lakh tonnes would need to be exported to maintain the same closing stock.
FRP demand
Sugarcane farmers in Maharashtra have demanded ₹350 per tonne more than the government-declared fair and remunerative price (FRP) in the first instalment of payment. Farmers’ organisation Swabhimani Shetkari Sanghatana has warned of an agitation if the demand is not accepted. However, sugar mills say that the government should intervene to help mills resolve their financial crisis. Announcement of export policy will help mills strengthen their position and pay FRP on time, industry players say.
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