Indian sugar prices climb as production drops amid record demand

Bajaj Hindusthan Sugar

10/04/2023 11:08

By Rajendra Jadhav
       MUMBAI, April 10 (Reuters) - Sugar prices in India have
climbed more than 6% in two weeks and are likely to rise further
as production is set to fall and demand from bulk consumers to
strengthen during the peak summer season, industry officials
told Reuters.
    Higher local prices will improve the margins of sugar makers
such as Balrampur Chini  BACH.NS , Shree Renuka Sugars
 SRES.NS , Dalmia Bharat Sugar  DLMI.NS  and Dwarikesh Sugar
 DWAR.NS , helping them make cane payments on time to farmers,
dealers said.
    But the price rise could add fuel to elevated food inflation
and discourage New Delhi from allowing additional sugar exports,
supporting global prices  SBc1   LSUc1  which are already
trading near multi-year highs.
    Sugar prices are rising mainly due to the downward revision
in production in top sugar producing state Maharashtra, said
Ashok Jain, president of the Bombay Sugar Merchants Association.
    Maharashtra is likely to produce around 10.5 million tonnes
in the 2022/23 marketing year ending on Sept. 30, dealers
estimate, compared to an earlier forecast of 13.7 million
tonnes.
    "Prices would rise further in coming months as demand from
bulk buyers is expected to rise because of summer season," he
said.
    Sugar demand rises as consumption of cold drinks and ice
cream climbs in India during the summer months that run roughly
from April to June. Demand also gets a boost in summer from the
wedding season.
    Demand has rebounded after being disrupted last year by the
COVID-19 pandemic, and could rise to a record 28 million tonnes
this marketing year, said one Mumbai-based dealer with a global
trading firm.
    The government is unlikely to allow additional exports as
closing stock for the season could fall to around 5.5 million
tonnes, the lowest in six years, he said.
    India has allowed sugar mills to export only 6.1 million
tonnes of the sweetener in the current season, down from the
record 11 million tonnes in the previous season.    

 (Reporting by Rajendra Jadhav; Editing by Jan Harvey)
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