1. Commodity News

India Produces 268.21 Lac Tonnes of Sugar up to 31st May 2020

Chander Mohan
Chander Mohan

Sugar mills across the country have produced 268.21 lac tons of sugar between 1st October 2019 and 31st May 2020.  This is 59.32 lac tons less than 327.53 lac tons produced at the same time last year.  As compared to 10 sugar mills which were crushing sugarcane on 31st May 2019, 18 sugar mills are crushing sugarcane on 31st May’ 2020 this year. 

ISMA had estimated a production of 265 lac tons for the current season. However, the gur and khandsari manufacturers shut their operations in U.P very early because of the lock down, because of which a substantial quantity of sugarcane got diverted to the sugar mills therein. That has resulted in extra sugarcane crushing by the mills in U.P and an additional around 5 - 6 lac tons of sugar production is expected in the current season, mainly from U.P, and from a special season in Tamil Nadu and Karnataka, above the previous estimation of 265 lakh tons made by ISMA. 

Therefore, the current year’s sugar production is expected to be around 270 lac tons. This will be around 60 lakh tons of less production as compared to last year. 

U.P. sugar mills have produced 125.46 lac tons of sugar as on 31st May’ 2020, which is 7.65 lac tons higher than the production of 117.81 lac tons produced by them last year on the corresponding date. Out of 119 mills which operated this year, 105 mills have ended their crushing and only 14 mills continue their operations. 

In Maharashtra, crushing season has concluded and the mills of the State have produced 60.98 lac tons of sugar, which is about 46.2 lac tons less as compared to 107.20 lac tons produced in 2018-19 SS. 

All the operating sugar mills in Karnataka have closed their crushing operations by 30th April’ 2020 and have produced 33.82 lac tons of sugar. However, few mills might operate in the special season commencing July’ 2020. Last year during the special season, Karnataka mills had produced 1.05 lac tons of sugar. Last year, sugar mills of Karnataka had produced 43.25 lac tons on the corresponding date. 

As on date, in Tamil Nadu, out of 24 sugar mills which operated in this season, 4 mills are currently in operation. Till 31st May’ 2020, sugar production in the State was 5.78 lac tons, compared with 7.22 lac tons produced on the corresponding date last year.  Of the 32 sugar mills, 29 mills had ended their operations and only 3 mills were in operation as on 31st May 2019, last year. Last year, during the special season, 2.13 lakh tons were produced by mills in Tamil Nadu.  

The remaining States of Gujarat, Andhra Pradesh, Telangana, Bihar, Uttarakhand, Punjab, Haryana and Madhya Pradesh, Chhattisgarh, Rajasthan and Odisha have collectively produced 42.17 lac tons till 31st May, 2020. 

Sugar mills in North India sold sugar as per their monthly quotas given for May, but the sugar mills in West and South India have a small quantity of unsold quota of May. The Government has extended the sale time of May quota and has released 18.5 lakh tons of monthly quota for June 2020. 

With the rules under lockdown getting relaxed, demand for sugar has started picking up from beginning of May, 2020. Now that the country is entering the unlocking phase, and restaurants and malls also being allowed to open, demand of sugar will further go up in June, as compared to May 2020. Therefore, along with the summer demand, it can be expected that sugar mills may be able to sell the entire June quota, along with the carry forward from May. 

It is estimated that upto the end of April, 2020, the sugar sales by mills was at par with the sales upto April, 2019 i.e. last year. This is thanks to the extra sales upto end of Feb 2020 by 10 lakh tons over last season. With demand picking up, and an expected increase in demand to refill the pipeline, which will come sooner or later, the sugar sales in 2019-20 SS may be around 5 lakh tons less than last year. 

Accordingly, the closing balance at the end of current season, earlier estimated to be about 95-100 lakh tons, may be higher at around 115 lakh tons. 

There is a lot of talk about sugarcane availability and higher sugar production in next season 2020-21. As is the practice, ISMA will obtain satellite images of the sugarcane area across the country in latter part of June 2020 to get an idea of the acreage under sugarcane available for harvesting next year. Accordingly, ISMA will discuss the same in its meeting attended by members from across the country, and make its preliminary estimates of sugarcane availability and sugar production for 2020-21 sugar season. 

Meanwhile, the OMCs have on 1st June, 2020, floated their 3rd round of Expression of Interest (EOI), inviting further bids from ethanol producers for another 99 crore litres of ethanol in the current year 2020-21, for supplies from 1st July to 30th Nov 2020. There is no change in the ethanol procurement prices to what was approved by the Govt. in Aug 2019, thereby confirming that there will be no changes in the ethanol procurement prices or in the ethanol blending policy with petrol. In other words, the long-term commitment of the Government to procure ethanol at transparent and stated policies has been re-emphasized, removing all doubts about any such changes due to fall in crude oil prices. 

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