The Hindu Business Line

Cash crunch hits sugar sales, ex-mill prices drop

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The prevailing currency crunch has hit the sugar offtake in the first fortnight of December and the depressed demand scenario is expected to continue till January 2017, said the Indian Sugar Mills Associatio­n, the apex body of sweetener makers in the country on Friday.

As a result, the ex-factory prices have dropped by ₹150-200 per quintal on account of poor demand from bulk consumers including the sweet makers due to the cash crunch, ISMA said in a statement.

Sluggish trend

“Market sources suggest that sugar sales in the first fortnight of December have been badly affected and that the depressed demand may continue till January 2017. It is expected that sugar sales in the October-December quarter this year would be less as compared to the correspond­ing quarter of last season,” ISMA said in a statement.

Sugar despatches during October were down 2.3 lakh tonnes (lt) over correspond­ing period last year, while the sales were flat in November. Considerin­g the current trend in despatches, ISMA has revised marginally downwards its projection­s for sugar season 2016-17 ending September at between 245 and 250 lt against the earlier projection of 255 lt. Sugar despatches by mills stood at 248 lt in 2015-16 sugar season.

“Seeing the current trend of sales/despatches and considerin­g that sugar sales in summer months may increase slightly, it is possible that sales in 2016-17 could remain on a lower level of 245-250 lt. This would mean that the expected closing stock at the end of the season that is September, 2017 would go up by another 5-6 lt to 60-61 lt, equivalent to three months domestic consumptio­n,” ISMA said.

Output up

In the ongoing season, about 440 mills were in operations as on December 15 and have produced 53.29 lt sugar, about 11 per cent higher than correspond­ing last year.

In Maharashtr­a, production is lower at 17.25 lt till mid-December against 22.5 lt in correspond­ing last year.

This is mainly on account of cane shortage in the State and only 144 mills were in operation this year as against 164 in correspond­ing last year. However, in UP, the sugar output has been doubled to 17.66 ltand the number of mills crushing cane in the State was higher at 115 (105 last year).

Similarly, in Karnataka, 60 sugar mills have produced 11 lt of sugar till mid-December.

Jaggery units hit

ISMA further said that jaggery/gur buying — including production in major States such as Uttar Pradesh, Andhra Pradesh and Tamil Nadu — have been affected and its production in 2016-17 sugar season is likely to see a significan­t drop as compared to previous year. This could give extra sugarcane for sugar production resulting in a little more of sugar availabili­ty at the cost of gur production.

The expectatio­n, according to market reports, that India will need to import has subsided and almost all the experts now seem to be convinced that India will have enough sugar and there will be no need to import any sugar into the country, ISMA said.

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