Fortnightly Gyan by Indian Sugar Guru, Yatin Wadhwana – Episode 6

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MAHARASHTRA CROP UPDATE
It has been more than a year since one last travelled in Maharashtra. A lot has changed but a lot has also remained the same. The roads have improved and many stretches are under construction. Masks are evident in the Urban areas, but have virtually disappeared in the Rural areas. However, the crisis in the Sugar Industry has remained unchanged.

At the beginning of the crop, Maharashtra was expected to have a record year, but as the crop progressed news started to emerge that all was not well and that there had been a major impact on Field Yields and Industrial Recoveries were also suffering. It emerged that Cane fields in Eastern & Southern Solapur and the contiguous area in Karnataka suffered the worst damage due to late rains (during October), which forced the Authorities to release excess water from the Dams, flooding the cane fields. This water did not recede for 4 to 6 weeks. In some cases the crush was only 50 to 60% of the Mill’s original estimates. Once again with cane supplies dwindling the Mills started harvesting immature cane, impacting Industrial Yields (Recovery).

Last of the standing Cane in Solapur South
(Image Credit : Mr. Yatin Wadhwana)

Water in the Bhima River which is normally dry at this time of the year, pointing to god prospects of Planting
(Image Credit : Mr. Yatin Wadhwana)

Going West from Solapur towards Sangli and Kolhapur the impact on the Cane Crop was limited, with Mills expected crush until Mid-March (about 15-20 days less than the original estimates). Once again the well established and financially sound Mills are expected to continue their crush until Mid-April.

Standing cane in Sangli, Maharashtra.

Ratoon Crop in Sangli, Maharashtra looking in a good condition
(Image Credit : Mr. Yatin Wadhwana)

Meanwhile in Karnataka 16 mills had stopped crushing as on 15th February 2021,
32 mills had stopped crushing until 22nd February 2021. All pointing to an abrupt end to their campaign.


One of several Harvesting Gangs returning from Karnataka to re-locate in the Satara region to catch the end of the Campaign.
(Image Credit : Mr. Yatin Wadhwana)

Overall, the production estimate for Maharashtra now stands at around 10 million MT +/- 200kMT  for the 2020-21 crop, which is about ) 0.5 to 1.0 mln MT lower than the original estimate.

THE BIG TAKE AWAY FROM THE TRIP WAS THAT A MAJORITY OF THE MILLS IN MAHARASHTRA STILL CONTINUE TO FACE FINANCIAL STRESS DUE TO THE LOW PRICES OF SUGAR. DESPITE A LOWER SALES QUOTA FOR FEB 2021 PRICES IN THE LOCAL MARKET CONTINUE TO RULE WELL BELOW THE GOVT. MANDATED “MINIMUM SELLING PRICE” (MSP) OF ₹31,000 PMT EX-MILL.

THE WORLD MARKET CONTINUES ITS UPWARD MARCH

The World market continued to make new highs as we get closer to the March Expiry on New York. It seems that the Funds have the bit between their teeth and it is the Trade and consumers who have been caught short in this short squeeze. Although very tempting it is highly unlikely that Indian Raws could get delivered due to the late rally and the logistics issues being faced in moving sugar to the Ports.

Click here to Read Episode 1
Click here to Read Episode 2
Click here to Read Episode 3
Click here to Read Episode 4
Click here to Read Episode 5

Indian Sugar Industry Guru – Mr. Yatin Wadhwana is a strategic consultant and trader with over 35 years of experience. He is Director at Gradient Commercial Pvt. Ltd. which undertakes strategic trades, consultancy and advisory roles. Apart from sugar, he has also been involved in Supply Chain Management, Logistics and the trade of other agri-commodities including wheat, rice and soybean.

To get in touch with Mr.Yatin Wadhwana write on yatinwadhwana@gradient.biz

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