Agri Commodities

Indian Sugar Mills Produced 31.1 Million Tons Of Sugar Since Beginning Of New Sugar Season As Mills Closed Early

Located on the Asian continent, India is the leading sugar exporter in the world and the country ranks second behind Brazil in terms of sugar production. Every year, India exports bulk sugar to over 50 countries and sugar exporters from different parts of the nation enjoy strong demand all year round.

Sugarcane is a water-guzzling crop and favorable weather conditions help India have a bumper harvest in order to meet domestic and global demand. However, the scene has been different this time around.

Heavy rainfall in different parts of the country has restricted sugarcane availability and this has led to fall in production. A look at the data reveal that Indian sugar mills produced only 31.1 million tonnes of sugar so far in the current sugar season beginning October 1, a 5.4 per cent fall in comparison to last year.

Host Of Factors Behind India’s Low Sugarcane Production

A drop in India’s sugar production has been due to a variety of reasons. To begin with, untimely rainfall in different sugarcane producing states of India hampered sugarcane’s vegetative growth. Adding to the woes, India’s carbon commitments and push for ethanol leave only a meagre portion behind for production of sugar via sugarcane crushing leading to low domestic output.

Rising Demand, Rising Sugar Prices

India’s low domestic sugar production is fueling up demand thereby leading to surge in prices. With rising mercury, demand for fizzy drinks and ice-creams has started to come in and that has already led to surge in demand for sugar.

On domestic front, the prices have started to increase. In a week itself, sugar prices in Kolhapur, the sugar bowl of Maharashtra have increased by 4.5% and is standing at Rs 34.5 per kilogram ex-mill. The prices are also on rise in Uttar Pradesh. Centrum Institutional Research said in a recent research note that owing to surge in demand this summer season, we believe the prices to further increase in the coming months.

In global markets as well, the prices are on the rise. On back of reduced exportable sugar surplus from India, global (raw/refined) sugar prices have increased by more than 11 per cent in last 10 days.

The Bottom Line

India is the leading sugar exporter in the world. More than 50 countries across the globe depend upon India for their domestic needs and any fluctuations in India’s sugar production reflect directly on global sugar prices.

This has been the case this time as well. untimely rains hampered sugarcane’s vegetative growth and as a result Indian sugar mills closed early leading to drop in sugar production. According to data, Indian sugar mills produced only 31.1 million tonnes of sugar so far in the current sugar season, a 5.4 per cent fall in comparison to last year.

Fall in India’s sugar production is also reflecting heavily on domestic and global sugar prices and with rising temperature, the demand is further expected to go up, putting pressure on prices.

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