Sugar mills go slow on fresh export contracts amid fall in global raw sugar prices: ISMA

Industry body ISMA on Monday said signing of fresh export contracts by sugar mills has "slowed down a bit" due to the fall in global prices of raw sugar but there is still time left for deals to export the sweetener.

In the first two months of the ongoing 2021-22 season that started from October, sugar mills have exported over 6.5 lakh tonnes of sugar as compared to 3 lakh tonnes in the year-ago period. Sugar mills have contracted for export of 37 lakh tonnes so far in the current season, it said.

However, most of these contracts were signed when the global raw sugar prices were in the range of 20-21 cent per pound.

"Signing of further export contracts have slowed down a bit during the last fortnight or so due to a fall in global prices of raw sugar to around 19 cents/pound," Indian Sugar Mills Association (ISMA) said in a statement.

Currently, ISMA said the global prices have recovered to some extent and are hovering around 19.5 cents per pound but exports are still not viable for Indian sugar.

There is a general opinion that since more than nine months are still left in the current season, there is enough time for the sugar mills to wait for an opportune moment when they would like to enter into export contracts, it noted.

"The international trade houses are also of the opinion that the world (sugar) prices will need to move up from the current levels if the world wants Indian sugar mills to export another couple of million tonnes of sugar in the next 7-8 months or so," ISMA said.

The country's sugar production reached 77.91 lakh tonnes till December 15 of the ongoing 2021-22 season, higher than the 73.34 lakh tonnes a year ago.

"The current year's production is slightly higher due to the earlier start of sugarcane crushing in western region of the country," ISMA said.

However, production in Uttar Pradesh, the country's leading sugar producing state, stood at 19.83 lakh tonnes till December 15 of the current season. This is lower compared to 22.60 lakh tonnes in the same period last season.

Production in Maharashtra, the country's second largest sugar producing state, rose to 31.92 lakh tonnes from 26.96 lakh tonnes in the said period.

The higher production in Maharashtra is because of the earlier start of crushing operations in the state and higher availability of sugarcane in the current season, ISMA said.

In Karnataka, the country's third largest sugar producing state, production touched 18.41 lakh tonnes till December 15 of this season, higher than 16.65 lakh tonnes in the year-ago period.

On the ethanol front, ISMA said 302.30 crore litres of ethanol were supplied during the 2020-21 ethanol season that ended in November, thereby, achieving an all-India average blending of 8.1 per cent.

"This is a record in itself, considerably over the 5 per cent ethanol blending level achieved in 2019-20," it said.

Going forward, the government has set a target to achieve 10 per cent ethanol blending across the country in the current season.

Against a total requirement of 459 crore litres of ethanol for 10 per cent blending, oil marketing companies have so far allocated a total of 366 crore litres after the first two cycles of Expressions of Interest (EoIs).

"We hope and expect to achieve 10 per cent blending in the current year as the remaining requirement is expected to be allocated in subsequent EOIs," ISMA added.