ao link


Linked In

India to have 'need' for sugar exports in 2019-20, despite fall in output


India will have a “need to export sugar” in 2019-20, despite the prospect of a 4.7m-tonne drop in production, the Indian Sugar Mills Association said, backing up expectations from some other commentators.


India, the world’s biggest sugar producer in 2018-19 with output at 32.90-32.95m tonnes, will see output fall next season to a three-year low of 28.2m tonnes, the industry group said.


The forecast reflected estimates, supported by satellite imagery, that sugar cane area will fall to 4.93m hectares, from 5.50m hectares last season.


The decline will be led by Maharashtra, the second-ranked cane-growing state, where “area has gone down by about 30% for 2019-20, mainly due to poor rainfall from September 2018 onwards, followed by low reservoir levels, which adversely affected sowing of 15-month and 12-month crops”.


“Sugar production is, therefore, estimated to be around 70 lac tonnes [7.0m tonnes] in 2019-20, as against 107.19 lac tonnes produced in 2018-19.”


‘Need for India to export’

Nonetheless, despite smaller output drops too expected in the likes of top producing state Uttar Pradesh and Karnataka, Indian sugar supplies in 2019-20 will be supported by record stocks carried over from this season.


“The opening stocks as on October 1 2019 is expected to be an all-time high” of about 14.5m tonnes, the association said.


Compared with a “normative requirement” of about 5.0m tonnes of carryover inventories, the country “is unnecessarily carrying about 95 lac tonnes [9.5m tonnes] of sugar inventory”.


Even factoring in smaller output ahead, “it is clear that there will still be a small surplus over the domestic requirement in 2019-20 sugar season, and, therefore, there will be need for India to export sugar in the next year also”.


‘Massive amount’

The comments follow analysis last week from Marex Spectron that India could in 2019-20 record “up to 6m tonnes of exports, ie 2.5m tonnes more” than this season.


A figure of 5m-6m tonnes “is in play”, said Dev Gill, senior agricultural options broker at Marex, whose maths was based on expectations of end-2018-29 stocks of 15m tonnes, production next season at 28m-29m tonnes, and consumption “flat-lining” at 25.5m tonnes.


India will be sitting on sugar stocks equivalent to “up to nine months of consumption”, which is a “massive amount looking at India with its 1.4bn population”, Mr Gill said.


Given that “sugar can only be kept for so long in storage”, besides the need for mills to raise cash to cover costs, “means that this sugar will have to come out as exports”.


Monsoon factor

The Indian Sugar Mills Association said that its production forecast for 2019-20 was “based on assumption of normal rainfall and other optimum conditions”, an outcome over which a slow start to the monsoon has raised doubts.


June, the opening month of the south west monsoon, was the driest in five years, official Indian meteorologists said, although this week is expected to see a pick-up in precipitation.


Marex said that the monsoon was the “only question mark” over its India sugar forecasts.

Related Stories

Evening markets: Grains suffer touch of late-week profit taking

The likes of corn and wheat trade lower in closing deals of a positive week. But the vegetable oil complex, and canola, stay strong

Evening markets: Weather worries keep a bid under ags

US export sales data for grains prove disappointing. But there are enough concerns over dryness and cold to keep the likes of sugar and wheat trending higher

Thai sugar output, exports to revive despite cane area dip

A recovery in yields towards the end of the latest harvest will set the tone for next season, when Thai exports will revive to their third highest ever

Evening markets: Double trouble sends ag commodity prices soaring

Worries over inflation combine with weather concerns to send prices in an array of ags higher. Corn and rapeseed hit multi-year highs
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© 2021 and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of AgriBriefing Ltd
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069