Govt may lift stock limit on sugar
Could also raise import duty if price fall persists
With ex-factory sugar prices showing a downward trend since the start of the 2017-18 crushing season in October, due to an expected bumper harvest of cane, the central government is planning to discontinue the stock holding limits from December 31.
Officials said this had almost been decided. A proposal to raise the import duty on sugar is yet to be decided, as it involves consultation between ministries. This duty was raised in July to 50 per cent, from 40 per cent, to curb import and stop the build-up of sugarcane payment arrears to farmers. There hasn’t been much of import since July but international prices have further softened due to a projected surplus, raising the prospect of more shipments. “The softening of sugar prices globally has also opened the avenue for export,” a senior official said. As of midNovember, global sugar prices had fallen almost 22 per cent in a year.
Ex-mill sugar prices in Uttar Pradesh, the biggest cane growing state, has fallen by almost ~300 a quintal since October 1. In Maharashtra, it has fallen by around ~400 a qtl. The two states together contribute a little over 80 per cent of the country’s sugar production.
Indian Sugar Mills Association (Isma) stated on Tuesday that sugar output in October and November had risen 42 per cent from a year before, to 3.95 million tonnes(mt). It estimates 2017-18 sugar production at 25.1 mt, as against 20.2 mt last year. As many as 443 mills were operating till November, as against 393 mills in the year-ago period. It estimates sugar production in UP, the largest producing state, at 1.35 mt till end-November, from 0.84 mt in the year-ago period. In Maharashtra, the second biggest producer, to 1.49 mt from 0.94 mt.
The current year started with an opening balance of around 3.87 mt, the lowest in several years. “With the government clearly deciding not to continue with the stock holding limit on traders beyond December, there will be buying interest to restock the pipeline, which will give a fillip to sugar offtake. If it had withdrawn the stock limits earlier, demand would have improved the market sentiment,” Isma added.