ChiniMandi, Mumbai: Wednesday 3rd June 2021
Production & Export Overview:
According to the latest reports by Indian Sugar Mills Association (ISMA) the country till May 31,2021 has produced 305.68 LMT of sugar and about 57 lac tons of contracts for export of sugar have already been entered whereas 44 to 45 LMT has been exported for sugar season 2020-21. Additionally, 4.48 LMT in Oct- Dec 2020 quarter against the MAEQ of last season 2019-20. To read more click here
Monthly Domestic Quota Announcement :
In a notification issued on 31st day of May 2021, the food ministry has allocated 22 LMT monthly sugar quota for June 2021 to 555 sugar mills which is 3.5 LMT higher than the quota allocated in June 2020. In the previous month the Govt. allocated 22 LMT monthly sugar quota to 555 mills. The allocated quota for June 2021 is 18.2% higher than that of June 2020.
According to market experts, the market may witness pressure due to the surge in Covid-19 cases that has led to extended lockdown restrictions in various states. Millers are likely to face selling pressure amidst the pre-monsoon rains in many states.
GOI brings forward ethanol blending target of 20% & announces nationwide sale of ethanol-blended petrol from 2023
GOI announced bringing forward the ethanol blending target of 20% from 2025 to 2023. This is the second time the Government has advanced the target which was earlier to be achieved in 2030. The Government has directed that oil companies sell ethanol blended petrol with percentage of ethanol upto 20% as per the Bureau of Indian Standards specifications, in the whole of the states and union territories.
In a recent report Indian Sugar Mill Association (ISMA) notified on the ethanol front which mentioned, against LOI quantity of 346.52 crore litres, 321.18 crore ltrs have been contracted for and 145.38 Cr litres of ethanol have been supplied as on 24th May 2021.
Sugar stocks once again in focus
Sugar stocks rallied up as much as 8% after the Government brought forward the target for attaining 20% ethanol-blending with petrol by two years to 2023 which reduces the country’s import bills. Amongst all sugar stocks, the stocks of Balrampur Chini Mills rallied around 8% whereas the rest Dhampur Sugar Mills, Dwarikesh Sugar Industries, Avadh Sugar and EID Parry (India) rose between 2 and 4 %
“On the domestic front, favorable policies, rising ethanol demand, aggressive ethanol capacity addition would drive an earnings CAGR of 15-20 percent over FY21-24E for our coverage companies. Sugar oversupply is a thing of the past as higher diversion of sugar in favor of ethanol (around 2.0mn tonne sugar in SS21 and >5-6mn tonne by SS24) would keep net sugar production under around 30mn tonne,” analysts at Elara Capital said in a recent sugar sector report.
GOI amends Sugarcane Control Order, 1961
The Amendment by GoI has allowed entrepreneurs to set up factories with sugarcane crushing & make ethanol directly from sugarcane juice & also allowed use of B-Heavy molasses for production of various types of ethanols. This will help in diverting surplus sugar to ethanol & timely payment to farmers.
The demand has been quite poor throughout the month of May with the surge in Covid-19 cases and statewise imposed lockdowns in different parts of the country amidst summers. 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 coming days 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 June, 03 2021 :
– Maharashtra:S/30 Sugar rates from millers are ₹3100 to ₹3120/Qntl. whereas M/30 ₹3125 to 3170.
In the resale market S/30 is trading at ₹3015 to ₹3040 whereas M/30 is trading at ₹3040 to ₹3110.
– Karnataka : S/30 Sugar rates from millers are ₹3180 to 3225 whereas M/30 is at ₹3275.
– Uttar Pradesh: The rates for M/30 are ₹3300 to 3315
– Gujarat: S/30 Sugar rates are ₹3141 whereas M/30 rates are at ₹3191 to 3201
– Tamil Nadu: S/30 Sugar rates are ₹3225 to 3300 whereas M/30 rates are at ₹3275 to 3350
(All the above rates are excluding GST)
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.
On Wednesday sugar prices closed lower on production & export outlook from India without financial assistance from the Government. London white sugar closed at $464.50/ton whereas raw sugar on the New York Stock Exchange was noted at 17.68 c/lb.
The market opened higher but dropped and is currently in the red at the time of writing this update. London White Sugar front month contract is trading at $460.90/tn whereas New York Sugar front month contract is trading at 17.46/lb
Indian Export Rates Today:
In the Indian market, white sugar for the season 2020/21 icumsa 100 ready delivery for exports is trading at ₹28700 to ₹28900 on ex factory basis. Demand for Raw sugar of the season 2020/21 icumsa between 600-1200 is at ₹27700 to ₹27800 factory basis
Currency, Commodity & Indian Indices:
The rupee traded against the US dollar at 72.981 whereas USD was trading with BRL at 5.0787 Crude futures traded at Rs.5038, Crude WTI traded at $69.00 a barrel. Sensex closed 382.95 points higher at 52,232.43 whereas Nifty ended 114.15 points higher at 15,690.35.