Sugar prices could remain firm despite curbs on exports
MUMBAI: India sugar prices are likely to remain firm despite New Delhi’s move to cap exports as stockpiles are set to fall to the lowest level in five years amid record shipments and robust local demand, industry officials said.
High local prices will keep margins of sugar makers intact and help them make cane payments on time to farmers.
India on Tuesday imposed restrictions on sugar exports for the first time in six years by capping this season’s shipments at 10 million tonnes.
Sugar prices are unlikely to drop because of the curbs as stockpile has depleted because of robust domestic demand and record exports, said Ashok Jain, president of the Bombay Sugar Merchants Association.
The government estimates that opening sugar stocks at the beginning of the new marketing year on October 1 could fall to 6.2 million tonnes, which would be the lowest in five years.
Sugar prices in Mumbai eased only 0.3% since the government announced the curbs.
“Mills are not under supply pressure. This year consumption has gone up because of robust demand from ice-cream and cold drink makers,” Jain said.
Consumption of cold drinks and ice cream and, as a result, the demand for sugar, rises in India during summer, which run roughly from March to
June. This year, ice cream sales surged because of the heatwave, said the Indian Ice Cream Manufacturers Association.
India’s sugar consumption in 2021/22 marketing year ending on September 30 could jump 5% from to a record 27.8 million tonnes, government estimates.
During festivals in the December quarter, sugar prices could move higher if the country receives lower-than-normal monsoon rain, said a trader based at Kolhapur.