India will continue to export about 60-70 lakh tonnes of sugar during 2020-21 season: ISMA

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According to the Indian Sugar Mills Association (ISMA), with an opening balance as on 1st Oct. 2019 of 145 lakh tonnes, estimated sugar production for the current season 2019-20 of around 272 lakh tonnes, expected domestic sales of around 250 lakh tonnes and exports of around 52 lakh tonnes during the season, the opening stocks as on 1st Oct, 2020, is estimated to be around 115 lakh tonnes.

The OB of about 115 lakh tonnes on 1st Oct. 2020, will be 30 lakh tonnes less than the opening stock as on 1st Oct 2019. The OB for 2020-21 of the 115 lakh tonnes is however, about 65 lakh tonnes more than the domestic requirement for the initial months of next season, till when new season’s sugar does not get fully available in the market. Since we expect much higher production in 2020-21 SS, India will continue to export about 60-70 lakh tonnes of the surplus sugar out of the country during 2020-21 SS. With Thailand’s sugar production to further fall in next season, beyond the 60 lakh tonnes fall in current season, there is an opportunity for India to export sugar to Asian countries.

The ex-mill sugar prices which had fallen to around Rs.31-31.50 per kilo during the lockdown due to drop in domestic sales, have improved quite significantly to close to the levels seen before the lockdown was announced, at around Rs.32-33.50 per kilo now.

Demand for sugar had also fallen during the lockdown from end of March, but as was expected the demand has picked up again from end of May. Thanks to the major relaxations in the lockdown and the summer demand coming up, the sugar offtake seems to have reached normal levels.

Similarly, thanks to the pro-active steps taken by the OMCs and cooperation extended by ethanol suppliers during the last 2-3 months, the ethanol offtake, which could have been majorly impacted due to drop in sales of petrol and lakh of storage capacities in some depots of OMCs, has been almost normal. The OMCs took prompt action to relocate the supplies to alternate depots in other States, to ensure smooth ethanol offtake from the distilleries. As a result, against an annual supply contract of 170 crore litres for 2019-20 (Dec-Nov), 88 crore litres have already been supplied till 15th June 2020, i.e. almost 52% of contracted quantity has been supplied in the 6.5 months of the contract period. Ethanol blending in petrol for the country as a whole has therefore at 4.97% as upto 15th June 2020. This is despite the lower production of sugarcane and molasses due to drought in Maharashtra and Karnataka. The 3rd tender was floated for more ethanol on 1st June 2020, at the same prices decided by Government in July 2019, and the bids are expected to be opened soon, which will increase supplies.

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