ChiniMandi, Mumbai: Saturday 22nd May 2021
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. The Government on Thursday cut down the assistance for exports of sugar under MAEQ by 33% to ₹4000/MT. According to industry experts, exports without any subsidy would be viable if the international sugar price range for white sugar rises above $435 & for raws the price range rises above 19/lb.
Demand Scenario :
The domestic market has been witnessing “no demand” 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.
Update by CARE Ratings:
Concerns of heavy surplus stocks have been looming in the domestic market which is hindering any growth in domestic prices in India and will continue to be a reason for the market not witnessing any sharp improvement in prices in the next few months.
Sugar stocks were once again witnessed in focus in Friday’s trade with a plunge of almost 5% in an otherwise strong market after GOI cut down export assistance for sugar exports by 33.3% to ₹4000/MT.
State wise Prices as on May,22 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.
– Karnataka : S/30 Sugar rates from millers are ₹3180 to 3225 whereas M/30 is at ₹3250.
– Uttar Pradesh: The rates for M/30 are ₹3375 to 3400
– Gujarat: The rates for new S/30 at ₹3101 to 3111 whereas new M/30 ₹3160 to 3180.
– Tamil Nadu: S/30 Sugar rates are ₹3200 to 3320 whereas M/30 rates are at ₹3300
(All the above rates are excluding GST)
Closing Overview :
On Friday sugar prices closed lower on Brazil’s weather concerns & weakness in Brazilian real that slipped against the US dollar to a 2-week low.
London white sugar closed at $447.40/ton down $6.00 whereas New York closed 0.37 points lower to close at 16.67/lb in comparison to the previous day.
Indian export rates:
In the Indian market, white sugar of 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.
Optimism by Europe’s Largest Producer :
The week has witnessed relatively lower trade volumes and sugar prices after last week’s volatility. Europe’s largest sugar producer Südzucker on Thursday gave an optimistic outlook with expectations of improvement and positive sentiments in the EU sugar market.
Update by Fitch Ratings:
Brazil is the primary culprit driving global supply down this year, followed by France, Germany and Thailand. Fitch forecasts that the Brazilian sugar mix in the 2021–2022 local season will remain relatively unchanged however the sugar output is expected to fall by at least 2.3 million tons due to lower yields in the ongoing crop season.
Brazil’s First Estimate by CONAB :
Early this week, the first estimate of 2021/22 sugarcane harvest, released on 18th May 2021 by the National Supply Company (Conab), indicates that Brazil may produce 628.1 million tons, a volume 4% lower in comparison to 2020/21. The drop is explained by the 3% reduction in the harvest area in the Southeast, the main producing region in the country, with 5.2 million hectares, and a 6.2% decrease in production, estimated at 402.2 million tons. The Midwest also decreased the area for cultivation by 0.8%, reaching 1.8 million hectares for a total of 137.5 million tons of sugarcane, 1.6% less than that obtained in the previous harvest. In the Northeast region, even with 0.5% less area, there is an estimated growth of 3.2% in average productivity, which should result in 49.7 million tons, 2.7% higher than in the last harvest. The South followed the trend, with a reduction of 2.1% in the area, but a 2.5% growth in production, estimated at 35.1 million tons. The North, on the other hand, should maintain the area and increase the crop harvest by 3.3%, with 3.6 million tons.
On the ethanol front, exports grew by 55.1% in the 2020/21 harvest, which ended in March, when compared to the previous cycle, despite the reduction in national ethanol production in the period. The increase was favored both by the exchange rate and by the reduction in domestic demand. In this 2021/22 cycle, the outlook is for the exchange rate to remain at a high level, but the growth in domestic demand should limit the availability of ethanol for export. The harvest also starts with an optimistic outlook regarding the recovery of demand for Brazilian ethanol, which was affected in the previous cycle due to the pandemic. Growth in oil demand is also expected in the second half of 2021, with greater control of the pandemic.