Domestic market price of sugar strengthened due to permission to export 10 lakh tonnes
11-Feb-2025 01:37 PM
The sugar market has seen significant changes following the government's approval of the export of 10 lakh tonnes of sugar for the 2024-25 marketing season.
This move has halted the softening of sugar prices in the domestic market, and prices have strengthened as a result.
However, there are ongoing concerns within the sugar industry, particularly regarding the price of ethanol.
While the government has slightly raised the price of ethanol derived from C-heavy molasses, it has kept the prices of ethanol produced from B-heavy molasses, sugarcane juice, syrup, and food grains unchanged.
This lack of change in ethanol prices is causing some distress among sugar producers, especially since the income of sugar mills was reduced during the 2023-24 season due to restrictions on the use of sugarcane for ethanol production.
For the 2024-25 season, the government has allowed deregulated use of sugarcane in ethanol production, which is expected to improve the financial situation of sugar mills.
Additionally, the ex-factory price of sugar has increased, which should help sugar mills manage their finances and ensure timely payments to sugarcane growers.
Despite these positive changes, there are concerns over the sharp expected decline in domestic sugar production. Industry experts predict a fall of 45-50 lakh tonnes in production for the 2024-25 season, with an estimated total production between 265-272 lakh tonnes, compared to 319-320 lakh tonnes in the 2023-24 season.
This decline in sugar production could affect the income of sugar mills, and while there may not be significant disruptions in the demand-supply equation this year, the following season could face challenges if stocks aren't replenished.
In summary, the sugar market is currently experiencing a period of stability in terms of pricing, but the long-term outlook depends on production levels and the government's policies on ethanol pricing and sugarcane use.