India's Sugar Stock Just About Enough To Last Till Diwali, Say Millers
India's sugar stocks are just about enough to last till Diwali this year after the output missed estimates in the first half of the ongoing season, according to millers.
The production of the sweetener declined 5% between October and April, according to data released by the All India Sugar Trade Association earlier this week. For the full October-September season, the production may fall 9-10% year-on-year to 325 lakh tonnes, according to Praful Vithalani, chairman of the association.
The association expressed concern over the availability till the start of the next season starting November. More so, as the risk of El Nino could not be ruled out.
Workers would be occupied as Diwali falls on Nov. 13 and could lead to a lower recovery and yield for almost two months, Vithalani told BQ Prime. Production for the new season is expected to begin in the last week of November and, as a result, the availability of sugar will be just enough or scarce in October and November, he said.
The industry sold the finished product at a discount of 10% in the domestic market in the first six months. This can hit the bottom line if sugar prices don't average out the cost of production in the second half of the year, he said.
Export prices, however, are running in a profitable bracket, Vithalani said. But that may not be the case nationally due to tight quantities and low prices, he said.
According to Vithalani, the average price of sugar is Rs 42.775 per kilogram, including the cost of Rs 35.50, Rs 2 GST, Rs 2.5 average transportation cost and Rs 3 of margin for wholesalers to retailers. He expects sugar to retail at Rs 45–47 this year.
Vithalani sought higher MSP for sugar as it has remained stagnant at Rs 31 for the past four years, even as raw material costs have been rising. Other demands include lower weight for sugar in inflation.
Sugar Availability
Total production last season: 360 lakh tonne.
Estimates for this season: 325 lakh tonne (9–10% decline from last season).
Opening stock: 70 lakh tonne.
Export allowed in the current season: 65 lakh tonne, including 4 lakh tonne left from the last season.
Estimated domestic consumption: 280 lakh tonne.
Quantity left by October 2023 (new sugar year): 50 lakh tonne, which is also the estimated available quantity for October–November before cultivation begins in the last week of November.
Dhampure Specialty Sugars Ltd., Gayatri Sugars Ltd., and Riga Sugar Co. led the decline in sugar stocks on Thursday.
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