Daily Sugar Market Update by Vizzie – 31/05/2021

ChiniMandi, Mumbai:Monday 31st May 2021
Domestic Market:
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.

The statewise quota is as below 

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, 31 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 no stock was available in the market hence no prices for Gujarat state today.
– 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.

Friday’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 is closed today due to Memorial Day, celebrated in the USA whereas the London Stock Exchange is closed due to Spring Bank Holiday.

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

Comment on Sugar Market by Archer Consulting:
What we can assume from the confusing picture of the sugar market before us is that the appetite of the funds might be running out; the strengthening of the real, though temporary, will hold back the sugar quotations; 16-17 cents can consolidate as a price support over the medium term. If there is a resurgence of the pandemic, the real will certainly drop again, but the visible acceleration in the major economies (except for Brazil) should make oil prices appreciate and – if the parity with the international price is kept – gas will go up here. Cost inflation is deeply worrisome, the IGPM – General Market Price Index is soaring and the mills are (re)calculating their costs fearing the increase in inputs.
To read the entire article click here – World Sugar Market – Weekly Comment – Episode 1


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