ChiniMandi, Mumbai: Saturday 29th May 2021
Domestic Market:
Production & Export Overview:
According to the latest reports by Indian Sugar Mills Association (ISMA) the country till May 15,2021 has produced 303.60 LMT of sugar and about 57 lac tons of contracts for export of sugar have already been entered into which translates to 95% of the total MAEQ quantity for sugar season 2020-21. According to market sources, mills have started exporting sugar under Open General License (OGL) i.e. without the financial assistance for sugar exports and exports could exceed 6.5 million tonnes.
Update on Indian Crop by Indian Sugar Guru
Mr.Yatin Wadhwana widely known as the Indian Sugar Guru shared that, with most of the sugar mills winding down their operations for the current crush the final sugar production in India will be about 30.7 to 30.8 million MT taking into account the Special Season crush of Karnataka and Tamil Nadu.
To read the series – Indian Fortnightly Gyan by Indian Sugar Guru – Yatin Wadhwana click here
Maharashtra Crushing Season Ends:
Maharashtra state ended its sugarcane crushing season 2020-2021 with a sugar output of 106.3 LMT compared to 61.61 LMT in the previous season. The total cane crushed in the current season was 1012 LMT compared to 545 LMT in the previous season. This season recorded an average recovery of 10.50% . To align in sync with the Ethanol Blending Programme (EBP), mills in Maharashtra currently hold the production capacity of 164.11 crore litres of ethanol. The expected increase in ethanol production capacity in the next crushing season is expected to be approximately 23% higher at 202.71 crore litres.
To read the whole story click here
Market Scenario:
The demand has been quite poor throughout the month with the surge in Covid-19 cases and statewise imposed lockdowns in different parts of the country. The Central Government however has been reluctant to call for a nationwide lockdown on apprehension of backlash on the economic growth. Sugar millers have already been facing the heat with selling pressure, stocks piled, unlifted sold stocks,growing interests etc, logistics has also taken a backseat hence not being able to liquidate funds. Market-men expect to witness some demand picking after state lockdowns are eased in the first week of June 2021. The industry is also eagerly awaiting some decision on the hike of Minimum Selling Price which is currently ₹3100/Quintal to improve the situation of stakeholders.
State wise Prices as on May, 29 2021 :
– Maharashtra:S/30 Sugar rates from millers are ₹3110 to ₹3140/Qntl. whereas M/30 ₹3220.
In the resale market S/30 is trading at ₹3025 to ₹3050 whereas M/30 is trading at ₹3050 to ₹3120.
– Uttar Pradesh: The rates for M/30 are ₹3300 to 3370
– Gujarat: According to sources, most of the mills have given their quota for third party exports therefore not much stock is available in the market until the quota for the next month is announced. The rates for new S/30 at ₹3121 to 3141 whereas new M/30 ₹3181 to 3201.
– Tamil Nadu: S/30 Sugar rates are ₹3260 to 3300 whereas M/30 rates are at ₹3350
(All the above rates are excluding GST)
International Market:
Market Overview:
Global sugar prices showed great volatility in May, after a strong increase in April.The initial rally in sugar futures contracts were driven by concerns about the persistent dry climate in the Center-South of Brazil, which is expected to affect the productivity of sugarcane fields in the 2021/22 harvest. Apparently, the appreciation of the real against the dollar has been a positive factor for sugar prices which removes the competitiveness of Brazilian sugar in the international market.
Yesterday’s Closing :
On Friday sugar prices climbed high where London sugar peaked to $462.30/ton with an appreciation of 1.05% whereas raw sugar on the New York Stock Exchanged was noted at $17.39/lb with an appreciation of 1.58% and extended its earnings owing to concerns on the Brazilian sugarcane harvest.
London white sugar closed at $459.60/ton with an appreciation of $2.10 whereas New York closed 0.24 points higher to close at 17.36/lb in comparison to the previous day.
The New York Stock Exchange will remain closed on 31st May 2021 due to Memorial Day, celebrated in the USA.
Indian Export Market Today :
Indian export rates:
In the Indian market, white sugar for the season 2020/21 icumsa 100 ready delivery for exports is trading at ₹27700 to 27900 on ex factory basis. Demand for Raw sugar of the season 2020/21 icumsa between 600- 1200 is at ₹27200 to ₹27300 factory basis
Brazil’s Water Emergency Alert:
On Thursday Brazil’s Electric Sector Monitoring Committee issued a “water risk” warning and reported that the volume of rainfall was lesser than normal in May leading to a worsened situation in the coming months. The dry weather conditions have damaged the production of sugar & coffee across Brazil pushing up futures prices of these commodities.
Sugar Market Analysis by StoneX:
As reported by Reuters, broker StoneX sees the global sugar market may shift from a deficit to a tiny surplus of 1.7 million tonnes in 2021/22 compared to the deficit of 3.7 million tonnes in 2020/21. The broker sees India’s 2021/22 sugar output rising 4.2% to 32 million tonnes, while it projects Thailand’s production to rebound 32% to 10 million tonnes. Good prices and favorable weather in both countries are boosting output. StoneX also sees a significant increase is expected in the European Union as well as the United Kingdom, a region that should produce 10.4% more sugar in 2021/22 despite the damage from frost in France.The broker also sees Brazil’s center-south region producing 35.7 million tonnes of sugar in 2021/22 (April-March), a 7% fall from the previous crop, due to drier-than-normal conditions. The global sugar production was estimated to grow 3.9% to 190.1 million tonnes, while demand was seen rising only 0.9% to 188.4 million tonnes.
Global Sugar View by Michael McDougall
The food or fuel argument will continue, but ethanol can provide an excellent bridge to a transition to EV (Electric vehicles) as it uses existing fuel distribution logistics, and it is more clean burning and carbon positive than fossil fuels. It is also an alternative for declining sugar consumption due to health concerns and declining demographics. But in India’s case, it would also put it back in the good graces of the world’s sugar producers. The question is, How long will that take?
To read this article in detail click here
Sugar Exports by Brazil
According to Archer Consulting, Brazil exported 1.9 million tons of sugar in April driving the 12-month accumulated (May/2020-April/2021) up to 32.5 million tons, a volume 68.7% higher than that of the same period last year. Broadly speaking, the foreign market saw a flood of 13.3 million tons of Brazilian sugar over a year.
Analyzing the 24-month period in order to cancel out possible peaks and valleys, the exports reached 51.8% million tons (covering May/2019-April/2021), still 12% below the greatest volume over the 24-month period reached in October/2017, which was 58.7 million tons. If Brazil exports the estimated 25 million tons of sugar in this crop, we will break the record over the 24-month period.
Sugar Consumption to rise in the coming years:
Archer Consulting reported that it sees the sugar consumption rising in the coming years basis four main reasons
i) Countries whose per capita sugar consumption pattern has been upward, reflecting an income recovery;
ii) countries known for being great consumers whose population is also increasing;
iii) countries whose potential is real, but it comes up against the per capita income for the consumption of industrialized food and drinks;
iv) countries that can migrate – albeit slowly – from the consumption of corn syrup to sugar, as occurred to the USA recently.
Conservatively, the combination of these factors point to an increase in world sugar consumption of about 1.0% per year for the next 6 years, chasing away the discouraging view we had about the consumption in the recent past. The estimate shows that the world consumption will go from the current 173.8 million tons over to 184.4 million tons in the 2026/2027 crop.
