Industry expert Rahil Shaikh shares insights on crushing season, sugar exports, ethanol blending, and more

The prices of sugar have surged in the international market, reaching a 12-year high. This increase is attributed to a perceived shortage of sweetener due to a restriction on Indian exports and logistical challenges in Brazil. India has extended export restrictions on sugar as domestic prices had started firming up, and the government is keen to control prices, especially during the festive season when demand typically increases.

Rahil Shaikh, Management Director of MEIR Commodities, shared insights into the current scenario of the sugar market, ethanol targets, and market estimation during an interview with MoneyControl.

Regarding India’s position in the current crushing season, he stated, “The Indian sugar sector has initiated the 2023-24 season, with approximately 56 mills operational in Uttar Pradesh, around 55 to 57 mills in Maharashtra, and about 45 mills in Karnataka commencing crushing. Most mills are expected to be fully operational around November 15, post-Diwali. ISMA and the government estimate the opening stock to be around 5.6 million metric tonnes (MMT). Production estimates range between 29 to 30.5 MMT, with our numbers at around 29 to 29.5 MMT. ISMA is pegging consumption around 27.8 MMT; we are pegging consumption at 28.7MMT because we expect the country is growing at 6.5%, and we have seen that last year’s consumption has been very buoyant, and diversion is around 4 to 4.5 MMT to ethanol. So, I think the closing stock will again be as comfortable as this year we were. During the season, we will be on the stock levels, replicating the last season, unless and until exports are permitted.”

Addressing the low probability of sugar exports, Shaikh noted, “At present, it is a curse word, but It can turn out to be a blessing as the production may come in. Because I think it takes a long time for a country to build its brand in the international market. We took five years of exports, and we built a brand called India supplying to Indonesia, Iran, Bangladesh, and not just raw sugar, but we were even supplying the white sugar. So, all of a sudden, when you have these kinds of breaks to restart when we will be back in our growing the sugarcane, then it’s again become the most difficult task to market your brand as India and Indian sugar. So, I think once the crushing begins, we have a right pace in the market. We all should focus that if we have about 6 MMT of closing stock, then why not pitch for the government to give us 2 MMT or a million ton? Because the government has very well controlled the prices this season with 5 MMT of stocks. So, any additional over and above 5 MMT is not needed in the country, as far as it’s been proven by the government that they have all the data now, and they can control the prices with 5 MMT. So, I’m a believer that probably it’s a curse word now, but during the month of January-February, we all should start to talk about exports.”

Speaking about ethanol targets, he commented, “On the ethanol space, the tender was about for 8.5 billion liters between grains, rice and sugar. Sugar has given 3 million tonnes as diversion this season, and rice and corn are about 2.9 MMT. So, in my opinion, 8.5 billion to 10 billion liters is where the scope to reach the country is. What we need is the right pricing and the mechanism to ensure that we are promoting the growth of sugarcane to achieve this. If we are keeping the prices too low and if we don’t have the availability of sugarcane, then the sectoral suffering will be there. For currently, 8.5 billion liters, we have only given about 5.9 billion. We have a scope to go another 2 billion there. And then to achieve 20%, we’ll have to go to 11 billion liters anyway. So, there is a huge scope in the ethanol sector to go much higher. But important is also sugarcane growing as well.”

On ethanol pricing, Shaikh emphasized on a scientific formula, stating, “There has to be a scientific formula. As the FRP grows, then there needs to be the cost of production, which increases. I think we all know that 90% of the cost of production is nothing else but sugar cane. So, I mean, by all standards, if you want to achieve 20% blending, then we all need to ensure that right pricing is given to the industry to ensure that they produce more. And mainly, as I mentioned, the main focus should be also the sugar cane growing side as well. So in case if we have to do that, the ethanol needs to go 20%. Main important is the right pricing and, secondly, ensuring that the raw product is always available.”

During the 2022-2023 season, India allowed mills to export only 6.2 MMT of sugar, following a record 11.1 MMT in the previous season. The Indian Sugar Mills Association (ISMA) estimates sugar production for the 2023-24 season at around 337 lakh tonnes, without considering diversion towards ethanol. The estimation of sugar diversion for ethanol production will be determined after the government declares the annual ethanol procurement price.


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