Commodities Buzz: Domestic Sugar Output Up Around 8% Says ISMA

As on 31st January, 2019, 514 sugar mills in the country have produced 185.19 lac tons of sugar, as compared to 171.23 lac tons produced by 504 mills last season on the corresponding date, according to a latest update from the Indian Sugar Mills Association (ISMA). This marks a increase of 8.15%. The higher production this year as compared to last year is because the mills had started crushing earlier this year than the previous season. Sugar exports are also not happening at the desired pace, noted the association. Considering the trend of yields, recoveries and drawal of sugarcane as also diversion of some ‘B’ heavy molasses to ethanol, sugar production this year is estimated to be around 307 lac tons. This will be 5-6% less than the sugar production of about 325 lac tons in the previous season.

In Maharashtra, sugar production till 31st January 2019 was 70.70 lac tons, compared with 63.08 lac tons produced last year same period. In the current 2018-19 SS, 191 sugar mills are operating, as against 182 mills operated last year in the same period. The sugar production in Maharashtra this year is expected to be less than actual production of last year.

In UP 117 sugar mills are in operation and they have produced 53.36 lac tons of sugar till 31st January 2019, compared with 53.98 lac tons produced by 119 mills on the corresponding date of last year. The sugar recovery achieved this season is about 0.81% more than what was achieved last year.

In case of Karnataka, till 31st January, 2019, 65 sugar mills have produced 33.40 lac tons, as compared to 26.78 lac tons produced by 58 sugar mills last year same period.

In case of Tamil Nadu, 29 sugar mills commenced their crushing operations so far for 2018-19 SS and they produced 3.10 lac tons of sugar, as compared to 2.12 lac tons produced by 30 sugar mills in 2017-18 SS on the corresponding date.

It is estimated that cane price arrears across the country have reached about Rs. 20,000 crore at the end of January, 2019. Considering the pace of crushing in the remaining three peak months of current 2018-19 SS and if current average all India domestic ex-mill price remains at around Rs. 29-30 per kilo, millers might not be able to clear the dues on time, it is feared that it may further increase to very uncomfortable levels by the end of April 2019.

Ex-mill sugar prices across the country are ruling in the range of Rs. 29-30 per kilo which is about Rs. 5 to 6 per kilo below the cost of production of sugar. ISMA has requested the Central Government to increase the minimum ex-mill price of sugar to Rs. 35-36 per kilo so that the sugar mills could recover their costs and improve their fund position for payment of cane price to the farmers and also service their debts and other obligatory payments.

Sugar exports are also not happening at the desired pace. Several sugar mills are either not voluntarily willing to export sugar against their allocated export quotas or do not find it viable enough to do so. Therefore, in order to ensure that all mills fulfill their allocated export quotas, ISMA has requested that the Government should enforce the quotas.