India sugar prices hit 18-month low, mills struggle to make cane payments

E I D-Parry (India)

05/12/2024 09:31

By Rajendra Jadhav
       MUMBAI, Dec 5 (Reuters) - Sugar prices in India fell to
their lowest level in 1-1/2 year due to ample supplies, making
it difficult for mills to pay farmers the cane price as the
crushing season gains momentum, industry officials told Reuters.
    The fall in prices is prompting industry to demand immediate
revision in minimum selling price (MSP) to limit losses, which
will improve mills' margins and allow them to make timely cane
payments to millions of cane growers.
    "Sugar prices have fallen below the cost of production. This
makes it difficult for mills to pay the revised cane price
unless sugar prices rise," said B.B. Thombare, president of the
West Indian Sugar Mills Association.
    Wholesale sugar prices  SUG-ARSKOL-NCX  at Kolhapur in
western state of Maharashtra have fallen nearly 8% in past four
months to 33,675 rupees  ($397.60) per ton, the lowest since
June 2023.
    The government should quickly raise the MSP above 40,000
rupees per ton to make cane crushing viable for sugar mills,
Thombare said.
    Indian trade bodies have been demanding an increase in the
MSP, saying the government has raised the mandatory procurement
price of sugarcane in recent years while the MSP has remained
unchanged since 2019.
    Sugar prices are falling as demand has decreased after the
festival season, and new season supplies have begun, said Ashok
Jain, president of the Bombay Sugar Merchants Association.
    Indian mills have produced 2.79 million metric tons of sugar
since the current season began on Oct. 1, down 35.4% year on
year, a leading industry body said on Monday.
    Mills in Maharashtra, which recently underwent state
elections, sold more sugar than allocated, as mills controlled
by politicians needed funds for election campaigns, said a
Mumbai-based trader.
    "The market was flooded with sugar in the past two months.
This is why mills are now struggling to sell sugar, even at
lower prices," the trader said.

($1 = 84.6950 Indian rupees)

 (Reporting by Rajendra Jadhav; editing by David Evans)
 ((rajendra.jadhav@thomsonreuters.com; Reuters Messaging:
x.com/Rajendra1857))