Despite the possibility of decline in production, there is little hope of a boom in the sugar market.

18-Jan-2025 03:14 PM

The sugar market in India is expected to face a difficult period despite the anticipated decline in production during the 2024-25 season. Both the Indian Sugar and Bio Energy Manufacturers Association (ISMA) and the National Federation of Cooperative Sugar Factories (NFCSF) have expressed concerns about a significant drop in domestic sugar production, which may fall by around 15.36% (49 lakh tonnes) from 319 lakh tonnes in the 2023-24 season to 270 lakh tonnes in the 2024-25 season. This is due to reduced sugarcane production and a decrease in the number of operational sugar mills across major producing states.

From October 1, 2024, to January 15, 2025, sugar production in India has already dropped by 13.66%, totaling 130.55 lakh tonnes compared to 151.20 lakh tonnes during the same period in the previous season. Despite this decline, the sugar market is not expected to experience a significant boom.

Several factors contribute to this grim outlook:

• There is a continued ban on the commercial export of sugar, which is unlikely to be lifted soon.
• Efforts to raise the ex-factory minimum selling price (MSP) of sugar have been unsuccessful, and there is no final decision on this matter.
• The industry is also disheartened by the lack of substantial relief in the upcoming Union General Budget.
• The increasing cost of sugar production due to rising Fair and Remunerative Price (FRP) for sugarcane has not been offset by a corresponding increase in MSP over the last five years.
• Domestic sugar consumption is unlikely to increase significantly, and the industry has substantial carryover stocks from previous seasons, which should ensure stable supply despite the production dip.

In summary, while sugar production is declining, the market is not expected to see a major rise in prices or demand, leaving little hope for a boom in the short term.