Sugar prices in India crash on low domestic and export demand

In the past one month due to subdued domestic and export demand, sugar price in India has declined by as much as 5.5 percent, with some grades of the sweetener trading at the government-set minimum selling price of Rs 29 a kg.

Price of the S-30 grade Sugar has fallen to Rs 29 per kg in Maharashtra this week as demand is tepid. Prices were ruling high before Diwali due to festival season demand. The NCDEX spot sugar in the Delhi market has dropped by more than 4 per cent in a month to Rs 31.15 a kg last week.

Demand has declined as winter is setting in when sales of ice-cream and cold drinks, among the largest sugar consuming segments, reduce. Another reason for the downward trend in prices is the slow pace of exports.

India has a target to export 50 lakh tonnes of sugar in 2018-19. But shipments, especially of white sugar, were slow. Mills will have to focus on raw sugar to boost exports.

The country’s annual sugar consumption is 255-260 lakh tonnes. Its output in 2017-18 was 322.5 lakh tonnes. India is looking at a surplus sugar production in 2018-19, though the Indian Sugar Mills Association has reduced its production estimate by 11.26 per cent to 315 lakh tonnes.

It is believed sugar millers from Maharashtra are not coming forward to sign export deals for various reasons like sugar being mortgaged with the lending banks and the possibility of a fall in sugar production.

The industry is also waiting for big government-to-government sugar export deals, especially with countries like China, Thailand and Malaysia. Indian sugar industry sources said a Chinese delegation would likely visit India next month to explore sugar imports from here, even as China is engaged in a trade war with the US, one of its suppliers.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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