Sugar prices have remained subdued in major markets across the country. Sugar prices in Maharashtra hovered around Rs. 34 per kg, whereas sugar prices in Uttar Pradesh were seen around the range of Rs. 37-38 per kg in the first quarter of the current calendar year.
The 2023-24 sugar season began on a low note. The projected lower sugar production in Maharashtra and Karnataka on account of poor monsoon rains had cast worry. However, as the season advanced, to the surprise of all, sugar production in these two States were higher than what was initially expected. Sugar production in Maharashtra is above 108 lakh tons and in Karnataka, sugar production is around 50 lakh tons of sugar. Overall the sugar production in the country has crossed 302 lakh tons, with few mills still in crushing operation.
Experts say that lower sugar demand in the market coupled with extended crushing period have led to subdued sugar prices in the market. With peak crushing season over, it is important to get an outlook on sugar prices post sugarcane harvest and major factors that will influence the sugar prices in the coming months.
Outlook on sugar prices
Atul Chaturvedi, Executive Chairman, Shree Renuka Sugars expects sugar prices to remain range bound. “We do not expect prices to rise too much even after crushing operations are over. Prices may remain range bound with a little upward bias on account of strong summer demand” he said. Chaturvedi expects ex-mill sugar prices in West, South and North to increase by Rs 1 to 2 per kg.
Rahil Shaikh, MD of Meir Commodities expects sugar prices in Maharashtra to increase by Rs.2 per kg. He states the reasons behind the increase “I have been saying time and again that sugar consumption in the current season will breach 3 million tons. If you look at the monthly sugar release quota given by the Government, the total sugar releases are almost touching the same number. The financially weaker sugar mills in Solapur, Kolhapur and Northern Karnataka, which were selling sugar over the sale quota allocated to them to generate cash, have vanished. I feel that the sugar prices in Maharashtra should rise by Rs.2 per kg in the post cane harvest season. The reason is that between Maharashtra and UP, the sugar price difference has widened a bit. Slowly sugar prices in Maharashtra will inch up to Rs. 36 per kg, and sugar prices in UP should be around Rs. 38-39 per kg. This should be the trend”.
Janeesh Patel, Director, Samarpan Sugar, said that sugar prices were low in the market in January, February and March due to higher supplies. “The Government curbed sugar export and restricted sugar diversion towards ethanol production due to expected lower production in Maharashtra and Karnataka. However, cane crushing in these two States extended and production was more due to better yield. These factors weighed down on the market. I feel sugar prices in May to September in Maharashtra and UP to be in the region of Rs. 35.50-36.00 per kg and Rs 38.50-39.00 per kg respectively.”
Factors that can influence sugar prices
Chaturvedi points out key factors that will have a positive impact on sugar prices. “ If the Government raises the Minimum Selling Price of sugar as has been requested by the industry and reduces the monthly sugar sale quota will have a positive impact on sugar prices. Another key factor to watch is also monsoon and its spread across States and regions”, he said.
Shaikh concurs with Chaturvedi. He said that the sugar prices in the future will be determined by the SouthWest monsoon and how it pans out. He adds “The Government is releasing on an average around 2.5 million tons as monthly sugar sale quota per month. For May, the Government might release higher monthly sugar quota due to summer and festivities demand. June and July could be the cooling off period. Then again for August, September, October and November which are festival months, there will be additional sugar demand. So the Government can release higher monthly sugar quota to quell the demand”.
Patel says that the continuity of the current dispensation post elections will impact the overall sugar prices. “The current Government is watchful. It wouldn’t allow sugar prices to increase much, as it will hurt consumers. I feel prices will remain range bound in this scenario”.
