Sugar prices under check on muted demand

Sugar rates have continued to remain under stress over the past three months in most States on muted demand even as manufacturing picks up.

Millers are pinning their hopes on summer demand and the export current market, whilst seeking an upward revision in minimal offering price tag (MSP) to keep away from construct-up of cane arrears.

Presently, the ex-mill sugar rates are ruling decrease by ₹80-a hundred for each quintal over the exact time period past calendar year. In Maharashtra and Karnataka, the rates continue to be about the MSP level of ₹3,a hundred for each quintal, whilst in Tamil Nadu they hover in between ₹3,two hundred and ₹3,225. In the North, the ex-mill rates are in the vary of ₹3,one hundred sixty-3,a hundred and eighty for each quintal.

Mounting arrears

“This is not a superior sign as lower sugar rates, a lot under the charge of manufacturing for past several months, have afflicted the liquidity of mills and their means to fork out the FRP to cane farmers. It is feared that if these kinds of situation persists then cane price tag arrears will bounce quite rapidly to awkward degrees,” in accordance to the Indian Sugar Mills Association (ISMA).

Commerce Minister Piyush Goyal, who holds more charge of Food stuff & Customer Affairs Ministry, informed Parliament past thirty day period that as of January-finish, sugar mills owed ₹16,883 crore to the cane farmers for the existing 2020-21 sugar season to September. The most up-to-date figures are probable to be on the larger facet.

“Domestic rates continue to be under stress for a easy rationale that summer demand has not kicked in. Usually, the summer demand kicks-in as early as February. We are awaiting demand to kick-in,” said Prakash Naiknavare, Managing Director, Countrywide Federation of Co-operative Sugar Factories Ltd.

He further more said that fairly a bit of quota has been lapsed and the specific sugar mills could not contend their quota for two factors – absence of demand and traders are not coming ahead to elevate.

“Those mills that are under stress of struggling with cane arrears are tempted to under minimize and are offering even under ₹3,a hundred. These mills have been issued warning by the two Centre and Condition Authorities. All these elements are contributing to the price tag stress,” Naiknavare said.

Sugar manufacturing, in accordance to the Indian Sugar Mills Association, till finish-February was larger by about twenty for each cent at 23.37 million tonnes (19.48 million tonnes).

Abinash Verma, Director Standard, ISMA, said looking at the enhance in FRP and other input prices, the MSP should really be greater to ₹34.5 for each kg.

The MSP was past revised two several years back again when the cane FRP was ₹275 for each quintal. As the FRP has been greater by ₹10/quintal for the existing calendar year, there is a want to enhance the MSP to guarantee that mills are ready to fork out on time, he said.

Verma said the trend on exports was encouraging as over 50 % of the qualified sixty lakh tonnes for the calendar year has previously been contracted.

Export prospective customers superior

Naiknavare said the international current market appears superior and optimum quantity of sugar should really go out of the nation. “Once that takes place, the domestic rates will increase automatically. About 34 lakh tonnes have been contracted for exports till now and seventeen lakh tonnes have remaining mills for ports. There are some difficulties at the ports – shortage of containers and vans are not offered,” he said.

“Indonesia has opened up its gates for Indian sugar as Brazil is unable to supply. Thailand is down for the previous three several years. Also, the Iran current market should really open up up upcoming thirty day period,” Naiknavare included.