Market expected to remain strong due to early closure of sugar mills

13-Feb-2025 08:13 PM

The sugar market is expected to remain strong for the foreseeable future due to a combination of factors, particularly the early closure of sugar mills caused by a severe shortage of sugarcane. In Maharashtra,

Uttar Pradesh, and Karnataka, the three top sugar-producing states, mills are facing reduced sugarcane supplies, leading to their early closure and limiting the crushing capacity of remaining plants.

The shortage is compounded by the expected drop in domestic sugar production, from 319-320 lakh tonnes in the 2023-24 season to 265-270 lakh tonnes in 2024-25. While domestic consumption is projected to reach 290 lakh tonnes, exports are expected to contribute an additional 10 lakh tonnes,

making the total sugar production for the current season about 300 lakh tonnes. However, with only 42.45 lakh tonnes of surplus stock anticipated by the end of the season, the sugar supply will be tight, potentially driving prices higher.

The government's export policy and concerns about production shortages are fueling a positive psychological impact on the market, further boosting prices.

There's also a risk that the shortage could continue into the next season, especially if the monsoon rains this year aren't as favorable, which would further complicate the situation.

Without a significant increase in sugar production in 2025-26, prices could rise drastically, and there might be a need to import sugar.

In short, while there is hope for better yields if the monsoon delivers, the current outlook for the sugar market is one of tight supply and high prices, which could remain for the next several seasons.