Sugar prices are expected to remain strong due to change in demand and supply equation
25-Sep-2024 02:05 PM
New Delhi. After several months of uncertainty, the sugar industry is once again expecting a boom in the market. On one hand, sugar production is expected to be slightly less in the 2024-25 marketing season as permission has been granted for free use of sugarcane in ethanol production,
on the other hand, its demand and consumption in the domestic sector is increasing rapidly. The new marketing season for crushing sugarcane and production of sugar is going to start from next month.
According to industry analysts, at the end of the 2023-24 marketing season ending on September 30, millers will have about 80-90 lakh tonnes of sugar outstanding (surplus) stock, which is much higher than the stock of 57 lakh tonnes available at the end of the 2022-23 season.
As a result, in the marketing season of 2024-25, there will be about 58 percent more outstanding stock of sugar as compared to the 2023-24 season and if there is a decrease in production, then it can be easily compensated by this additional stock.
But in the marketing season of 2024-25, the difference between the production and use of sugar will decrease and it will have a positive impact on the market.
If the production of sugar decreases by 10 lakh tonnes and gets stuck at 310 lakh tonnes and its use increases to 290-292 lakh tonnes, then there can be a difference of 18-20 lakh tonnes between the two.
The important thing is that the ban on commercial export of sugar has been imposed since June 2023, while the industry is putting heavy pressure on the government to remove it.
The industry wants that if the ban is not completely lifted, then at least 15-20 lakh tonnes of sugar should be allowed to be exported.
However, the government is currently refraining from taking a decision on this. The domestic market price of sugar is running higher than the ex-factory minimum selling price but slightly below the cost of production.
The government is considering increasing this minimum selling price slightly, which may have a partly psychological effect.