The Centre on Tuesday allocated additional 2 lakh tonnes (lt) of sugar taking the total monthly quota to 24 lt for sales in domestic market during April after prices started moving up amid drop in production.

In a notification issued by the Directorate of Sugar, the allocated quota has been distributed among 482 sugar mills across the country.

Andhra Pradesh, Tamil Nadu and Haryana had seen significant increase in allocation for April from the March quota, while Bihar has bee allocated lower when the 22 lt allocation announced in March, according to All India Sugar Trade Association (AISTA).

Drop in output

Sugar production in India dipped over three per cent to 29.96 million tonnes (mt) in the first six months of the current sugar season (October 2022-March 2023) against 30.99 mt a year ago, according to Indian Sugar Mills Association (ISMA), an industry body of private sugar companies. However, according to the National Federation of Cooperative Sugar Factories (NFCSF), the production dropped four per cent to 29.87 mt during the October-March period of the current season from 31.12 mt a year ago.

Both the industry associations said 337-338 mills closed their operations, while 194 factories were crushing as on March 31. In the year-ago period, the number of operational factories was higher at 366. Sugar production in the next six months may be lower, experts said.

Domestic sugar prices have increased seven per cent in past three weeks. On the other hand, while there has been increased demand from China, Egypt, Sudan and some other countries amid ethanol prices inching up with rise in crude prices.

“The timing is positive for sugar as demand is always higher during summer. The news of decline in production has come in time along with increased global prices of ethanol. Above all, the El Nino fears have created speculation of lower production next year,” said a market analyst.

But industry experts said that even if Uttar Pradesh gets less rains during monsoon, it may not dent the crop’s prospects as seen from this year’s experience. Karnataka is predicted to get good or normal rainfall. The only concern is about Maharashtra, where meteorologists are divided on how the monsoon spread will be over main regions — Solapur, Kolhapur, Ahmednagar, Pune and Satara.

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