India’s sugar production will likely be lower at 35.8 million tonnes (mt) this season (October 2022-September 2023) against industry estimates of 36 mt, the US Department of Agriculture (USDA) has said but Indian stakeholders prefer to wait and watch for further developments. 

“India production is estimated to decline 3 per cent to 35.8 mt on lower sugar yields from sugarcane,” the USDA said in its bi-annual sugar report released last night. 

This is 0.7 mt lower than the estimates made by the Indian Sugar Mills Association (ISMA), a body of private sugar mills whose projections are more closely watched by the Centre. 

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Better period

Asked on the USDA’s estimates, an ISMA spokesperson said the association was sticking to its estimates of a record 36.5 mt production. 

The All India Sugar Traders Associatin (AISTA), another key player in the sugar industry, said it agreed with the USDA numbers. 

“We concur with the USDA numbers but it could be subject to 5-6 per cent variance on either side. The last week of January or February first week will be a better period to project the 2022-23 season production with minimum error,” said Praful Vithalani, AISTA President. 

The USDA estimated global production 2.8 mt higher at 183.2 mt on higher production in Brazil, China, and Russia, offsetting declines in the European Union, India, and Ukraine. 

It said global trade will be higher despite a drop in Indian shipments. It would be offset by Brazil and Thailand shipments. 

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Stocks draw down

Ending stocks are projected to be lower in view of higher global consumption, exceeding the increase in production. China is projected to import less, opting to draw down its stocks for consumption, while lower Indian production will add to the situation. Thailand, too, is expected to tap its stocks to support higher exports due to the strong global demand, the USDA said. 

On India, the US agency said consumption will be unchaged at 29 mt, the same as last season, while exports will decline 20 per cent to 9.39 mt from 11.73 mt last season. As a result, ending stocks is estimated to be lower.

According to ISMA, sugar consumption, this season, is expected to be 27.5 mt, while ending stocks would be 7 mt, the same as last season, if the Centre permits 8 mt exports. 

The USDA has not made any mention of India’s capping sugar exports at 6 mt for the current season with a rider that the shipments should be done by May 31, 2023. The Centre had regulated sugar exports from June 1 at 10 mt to ensure ample supplies in the dometic market for the festive season.

However, it allowed an additional 1.2 mt that had been held up. Sugar exports were allowed to resume from November 5 after the Centre notified the quantity that can be shipped out. 

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London-based diversified global financial services platform, Marex, in a report on Monday, said Indian exporters may have sold more than 4 mt in the global market. It said raw sugar could be 2.3 mt out of this. 

Marex said the net long positions of non-index funds have increased to 1,32,000 last week from 44,000 the previous week. The market could head down, though India having sold its stocks may not give much leeway to the bears, it said. 

Currently, raw sugar on InterContinental Exchange, New York, is quoted at 19.64 US cents a pound ($436 a tonne) after hitting a five-week high of 20.3 cents on November 15. 

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