Domestic sugar prices are anticipated to rise in the near future. This forecast is attributed to a combination of climatic, crop forecast and domestic political factors that might influence the sugar prices.
The continuing scorching heatwave conditions in most parts of the country has led to higher sugar consumption and sugar demand. The summer temperatures have hit the roof crossing 45 degrees in several parts of the country affecting the health of people.
Uppal Shah, Founder and CEO of ChiniMandi said “There has been an unusual heatwave in the country this year which has resulted in an unprecedented consumption of sweetened drinks, soft drinks, beverages, ice-creams etc. This has escalated the domestic demand for sugar mainly by the bulk consumers of sugar like ice cream, beverage makers etc. In the eight months of the current season from October 2023 to May 2024, the total sugar consumption in the country is 196 lakh tons compared to 180 lakh tons in the corresponding period last year”.
Although the Southwest monsoon has entered the Indian peninsula and major weather bureaus have indicated a robust rainfall in the country in the season, however it would be premature to predict the total coverage and quantum of rainfall which could have a bearish impact on the domestic sugar prices.
The Government has set the June 2024 sugar sale quota at 25.50 lakh metric tonnes (LMT). Experts say that the quota was higher in June keeping in mind the national elections.
“Considering the monthly sugar quota of the last few years, especially once the monsoon sets in, it can be presumed that the Government may fix a lower quota for July. This could impact the sentiment and we can expect sugar prices to rise”, Shah stated.
Sugar production forecast for the ensuing sugar season of 2024-25 is also likely to impact domestic sugar prices. “Maharashtra, which is one of the largest sugar-producing States in the country, is expected to witness lower sugar production next year. This could skew the demand and supply equation in the market, and jack up domestic sugar prices in the market”.
In addition to the climatic challenges, Shah said that the completion of the national elections has also played a role in the expected price increase. Historically, post-election periods might see adjustments in various economic policies and market dynamics, which can influence commodity prices, including sugar.
