Sugar price falls; mills want stock limits to go EID Parry sees better cane availability in Tamil Nadu
Early arrival of new season production has pushed sugar prices down, say mill owners.
A note from Indian Sugar Mills Association (Isma) said sales in the festival months of September and October were around 4.1 million tonnes, compared to about 4.2 mt in the same two months last year.
The M-30 variety is now selling here at ~3,746 a quintal, down nearly 4 per cent from July’s ~3,905 a qtl to trade at lowest after September 2016. Isma says the exmill price in Maharashtra is estimated at ~34-35 a kg and in Uttar Pradesh at ~352-36 a kg, against the all-India average cost of production of ~37.5 a kg. This, it complains, is putting pressure on mills’ realisation.
The association estimates sugar production this season (it began on October 1, nearly 25 per cent higher than the one before, at 25.11 mt. Hence, it says, it has asked the government to withdraw the stock holding limit on traders with immediate effect. Else, it says, cash flow will be affected, affecting mills' capacity to pay cane farmers.”
The 2017-18 season's opening stock is estimated at 3.9 mt. Cane crushing began earlier than the usual in previous seasons. As on last Wednesday, 313 mills had begun operations as compared to 222 which had at this time a year before. Around 1.37 mt of sugar had been produced in the first 45 days of the season, as compared to 0.77 mt in the first 45 days of last year.
The main contributors to the higher production are mills in UP and Maharashtra. The former had produced 567,000 tonnes of sugar as on Wednesday, against 193,000 tonnes last year. In Maharashtra, against last year’s 192,000 tonnes, this year has already seen 326,000 tonnes. The third largest producer, Karnataka, has produced almost the same as last year. Murugappa Group firm EID Parry says if the northeast monsoon is good for the next six weeks, Tamil Nadu would see better sugarcane availability during sugar year 2018-19. Supply was tight last year in the state, due to drought in the region.
Overall production in the country would rise from 20.3 million tonnes (mt) in 2016-17 to 24.5-25 mt, said S Suresh, managing director.
As of now, "Tamil Nadu is going to be a bit tighter in terms of sugar", he told analysts in a recent earnings call. In the quarter ended September, there was a 46 per cent drop in cane availability for the state. The company mitigated the impact to an extent due to better prices and raw sugar import allowed by the government. The company has five sugar factories in Tamil Nadu, three in Karnataka and one each in Andhra Pradesh and Puducherry.
He added the northeast monsoon had started showing some good signs in the interior part of Tamil Nadu.