ChiniMandi, Mumbai: Thursday 27th 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. Maharashtra ended its crushing season with a sugar output of 106.3LMT with an average recovery of 10.50%.
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.
State wise Prices as on May, 27 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 ₹3175 whereas M/30 is at ₹3225.
– Uttar Pradesh: The rates for M/30 are ₹3350 to 3370
– 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 ₹3175 to 3300 whereas M/30 rates are at ₹3275 to 3350
(All the above rates are excluding GST)
Closing Overview : On Wednesday sugar prices closed lower after UNICA’s data was considered as bearish. Unica reported that Brazil’s Center-South produced 2.38 MMT of sugar in the first half of May, higher than the expected number of 2.24 MMT.
London white sugar closed at $450/ton down $5.90 whereas New York closed 0.26 points lower to close at 16.78/lb in comparison to the previous day.
At the time of writing this update sugar prices are in the green with prices up more than 1.47%
London White Sugar front month contract is trading at $456.60/tn whereas New York Sugar front month contract is trading at 17.12/lb
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 basi
United States Department of Agriculture (USDA) estimates
USDA estimates Brazil’s 2021/22 sugar crop 5% lower, at 39.92 million tons owing to the decreased volume of sugarcane due to unfavorably dry weather and occurrence of fires. The USDA estimates sugar production at 10.2 million tonnes in comparison to 10.15 million tonnes in 2020-2021. Furthermore, theDepartment estimated world sugar production in 2021/22 at 185.54 million tonnes with consumption of 174.41 million tonnes. Meanwhile the global harvest is likely to witness an increase by 6 million tons, almost 186 million with higher production in the European Union, India and Thailand, offsetting the decline in Brazil.
Optimism by Europe’s Largest Producer :
Europe’s largest sugar producer Südzucker last 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.
Currency, Commodity & Indian Indices:
The rupee traded against the US dollar at 72.618 whereas USD was trading with BRL at 5.2870 Crude futures traded at Rs.4808, Crude WTI traded at $66.04 a barrel. Sensex closed 97.70 points higher at 51,115.22 whereas Nifty ended 36.40 points higher at 15,337.85