Weekly Review-Sugar
25-Jan-2025 07:21 PM
Positive impact on sugar prices due to export announcement
The weekly review highlights a few important developments in the sugar market that have created a significant impact on sugar prices. Here's a breakdown:
Government Announcement on Exports:
- The approval for the export of 10 lakh tonnes of sugar for the 2024-25 marketing season has been a key driver behind the recent rise in sugar prices. As soon as the announcement was made, ex-factory sugar prices saw an increase of Rs 300-350 per quintal, and this upward trend is expected to continue.
Export Process Delays:
- Despite the export permission, there’s a delay in actual contracts being signed. Millers are hesitant to sell their sugar at lower prices to exporters, particularly when they can fetch higher prices in the domestic market. Indian sugar is competitive globally at Rs 3800-4000 per quintal, but the mill delivery price has surged beyond these levels.
Price Trends in Different Regions:
- Sugar prices vary across regions, with significant price hikes in mill delivery prices in Uttar Pradesh, Punjab, Bihar, and Gujarat. Spot prices also show upward movement, especially in Delhi, where the price reached Rs 4150-4430 per quintal.
Decline in Sugar Production:
- There’s a notable decrease in sugar production this season, particularly in Maharashtra, which is lagging by over 10 lakh tonnes. Similar declines are observed in Uttar Pradesh and Karnataka, contributing to the ongoing supply concerns and price pressures.
Ethanol Production:
- A significant portion of sugar—around 40 lakh tonnes—will be diverted to ethanol production, further tightening the supply of sugar for the domestic market. With strong export demand and high ethanol usage, it's unlikely the market will see any significant price softening soon.
Overall, the sugar market appears to be facing a tight supply situation, which will likely keep prices elevated in the near future. The government’s decision to allow exports seems to have brought a temporary relief for millers, but with production lagging and export demand strong, it’s uncertain how long the market will stabilize.