Agri Business

Aided by early crushing season, Sugar output up 10% at 47.21 lakh tonnes till Nov-end

Vishwanath Kulkarni | | | Updated on: Dec 02, 2021
image caption

Fall in global raw sugar prices slows down export deals.

An early start to the sugar crushing season in the country’s western region has pushed up the sweetener production by about a tenth till the end of November. According to the Indian Sugar Mills Association (ISMA), the production till November 30 this year was 47.21 lakh tonnes compared to 43.02 lakh tonnes in the same period last year.

About 416 mills have started crushing this year as compared to 409 mills last year. In Uttar Pradesh, 101 sugar mills have started operations as of the end of November and produced 10.39 lack tonnes compared to 12.65 lakh tonnes in the same period last year.

In Maharashtra, 172 sugar mills have started crushing operations this year compared to 158 sugar mills until November end of last year. Until November end, sugar production in Maharashtra stood at 20.34 lakh tonnes compared with 15.79 lakh tonnes same period last year.

Similarly, in Karnataka, 66 sugar mills had produced 12.76 lakh tonnes of sugar compared to an output of 11.11 lakh tonnes by 63 mills in the same period last year.

In Gujarat, 15 sugar mills have produced 1.66 lakh tonnes compared to 1.65 lakh tonnes in same period last year.

ISMA said the cane crushing operations in all the other States have also begun, and the pace of crushing is picking up. About 62 sugar mills are operating in other states that have produced 2.06 lakh tonnes in this season until the end of November, higher than 1.82 lakh tonnes in the same period last year.

As per information furnished by mills and estimations made by ISMA, total sales in the first month of the current season, that is, October 2021, was around 24.50 lakh tonnes against the domestic sales quota of 24 lakh tonnes given by the Government.

ISMA further said that it was noteworthy that the Government had increased the time to sell an additional quota of 2.5 lakh tons which was allotted for September-October.

Last year, during the same period, sugar sales were 22.73 lakh tonnes as against sales quota of 23 lakh tonnes. This year sales are higher mainly due to the easing of Covid restrictions, higher sales quota (about 26.50 lakh tonnes including carry over from September 2021), and higher festive demand.

Exports

Further, ISMA said contracts for sugar exports for about 35 lakh tonnes has already been contracted for exports in the current sugar season 2021-22.

Most of these contracts were signed when the global sugar prices were in the range of 20-21 cents per pound of raw sugar. However, with a fall in the global prices to below 20 cents, and now to around 18.6 cents per pound of raw sugar, the Indian sugar mills are not coming forward to sign further export contracts.

Considering the domestic ex-mill sugar prices in the western and southern part of the country and the global prices of around 20-21 cents per pound, prevailing in the last couple of months, most of the export contracts of the 35 lakh tonnes are by the sugar mills from Maharashtra and Karnataka.

The ex-mill sugar prices in north India are slightly higher in the western and southern parts of the country, and therefore not many export contracts have taken place from the northern region.

Ethanol production

ISMA also said that considering that a substantial quantity of around 34 lakh tonnes of sugar equivalent is estimated to get diverted into ethanol production, the pressure on the sugar mills to immediately contract for further exports is less. Therefore, it seems that the sugar mills will wait for an upward revision of the global prices to around 21 cents or more.

The Oil Marketing Companies have invited bids from ethanol manufacturers for ethanol supply year 2021-22 (December-November) in the end of October 2021, for 459 crore litres for the targeted 10% ethanol blending with petrol for the country as a whole. The bids were opened on November 12, wherein the ethanol manufacturers offered about 414 crore litres of bids for ethanol supplies. Out of this, 333 crore litres have been offered by the sugar industry, based on B-heavy molasses and sugarcane juice as feedstock. This is against around 216 crore litres supplied in last year, from B-heavy molasses and sugarcane juice. Therefore, as against about 20 lakh tonnes of sugar equivalent diverted into ethanol last year, around 32 lakh tonnes of sugar equivalent diversion had been offered in the bids.

The OMCs have finalised and issued letters of intent for signing contracts with the ethanol manufacturers for 317 crore litres of ethanol supplies in 2021-22 (against the offer of 414 crore litres). However, the OMCs have floated a second EOI for another 142 crore litres, for which the last date of submission is December 3, 2021, ISMA said.

Published on December 02, 2021

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

COMMENTS
This article is closed for comments.
Please Email the Editor

You May Also Like

Recommended for you