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Last Trade - 12/05/21

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Micro Cap
Market Cap £4.87m
Enterprise Value £13.2m
Revenue £134.6m
Position in Universe 2100th / 3110

Indian cane arrears could hit $3.8 bln as prices tank -industry

Tue 17th April, 2018 1:18pm
* Mills fail to pay promised cane price as sugar prices drop
    * Exports could help in bringing down stock, support prices
    * Lower world prices make exports unviable without govt help
    * Sugar output seen rising to 31 mln T vs 20.3 mln T yr ago

    By Rajendra Jadhav
    MUMBAI, April 17 (Reuters) - Cane arrears in India could
leap to a record 250 billion rupees ($3.8 billion) in 2017-18 as
a drop in sugar prices to their lowest level in 28 months made
it difficult for mills to pay farmers mandatory cane prices,
industry officials told Reuters.
    The record arrears, up from 20 billion rupees in the
previous year, will force the world's second-biggest sugar
producer to provide incentives for exports, increasing pressure
on global sugar prices  SBc1   LSUc1 .
    Mills currently owe farmers 200 billion rupees, but the
figure will rise unless the government offers incentives to
export surplus output, said Prakash Naiknavare, managing
director of the National Federation of Cooperative Sugar
Factories (NFCSF).
    "Every week sugar prices are falling. Mills could not make
cane payments at the government's fixed price," he said.
    Record output has sent domestic sugar prices
 SUG-ARMKHP-NCX  down by a quarter in the past year to their
lowest since December 2015.
    At the beginning of the season India was expected to harvest
25 million tonnes of sugar, but the industry now expects a
record 31 million tonnes, Naiknavare said. India's sugar demand
is pegged at about 25 million tonnes.
    To reduce stocks, India made it mandatory for mills to
export 2 million tonnes of sugar in March, but mills have failed
to sign deals because prices are lower overseas, said one 
Mumbai-based dealer with a global trading firm.*:nL3N1RB27L
    "Mills are waiting for government incentives. They will
incur a loss of more than $100 (per tonne) if they sell in the
world market at current prices," he said.
    The government is likely to approve a proposal to pay
farmers about 55 rupees per tonne of cane sold to the mills,
government sources said this month.[ nL3N1RM3D5]
    "A few mills are making distressed sales to cover cane
payments and putting pressure on prices," said Balasaheb Patil,
chairman of the Sahyadri co-operative sugar factory in
    Mills need to pay cane farmers within two weeks of harvest.
    The mills agreed in May to pay farmers 11 percent more for
their cane for the 2017/18 marketing year, which started Oct. 1.
    The continuous fall in sugar prices has prompted large
consumers such as drink and sweet makers to keep lower
inventory, said Ashok Jain, president of the Bombay Sugar
Merchants Association (BSMA).
    "Production is going up but consumers are reducing purchases
in expectation of further price falls," Jain said.
($1 = 65.6425 Indian rupees)

 (Reporting by Rajendra Jadhav
Editing by David Goodman)
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