HomeIndiaBadal on production from UP, government may restrict sugar exports

Badal on production from UP, government may restrict sugar exports

After banning the export of wheat and broken rice, Narendra Modi The government is ready to take the next decision on sugar.

Mills are likely to be allowed to export up to 5 million tonnes (litres) of sugar in the new sugar year from October. A decision on further quantum will be taken after reviewing the domestic production and price trends in January-February.

On May 24, the Modi government shifted sugar exports from “free” to “restricted” category. It capped total exports to 100 liters for the 2021-22 sugar year, which was raised to 112 liters with effect from August 1.

“They (government) are worried about production, especially in Uttar Pradesh where monsoon rains have been around 43 per cent less and there are reports of sugarcane crop being affected by red rot (a fungal disease), a source said. ” Indian Express,

In the current 2021-22 sugar year, both production and exports from India touch a record level of 360 liters and 112 liters respectively. However, the stock would be 60 lt, a five-year low, projected on 30 September.

“This is still equivalent to two-and-a-half months of consumption (estimated at 275 liters for the full year). Also, growth in Maharashtra, Karnataka and Tamil Nadu is likely to offset lower production in Uttar Pradesh, which has received good rains and The reservoirs are full, but they don’t want to take any risks, especially after the latest consumer food prices. inflation The figure for August is 7.62 per cent,” the source said.

Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories, said allowing exports in installments makes sense, as it would enable mills to sign contracts before commencing production for the new year (crushing operations usually take place around Diwali). starts after).

“The government has already told us that mills can sign export contracts for up to 15 per cent of their production (estimated at 330-360 liters in 2022-23). We have communicated this to our members so that they can plan accordingly.”

A strategy to regulate exports is also likely in 2022-23 after reviewing the domestic availability situation.

“The notification allowing an initial quantity of 50 liters is expected in the next few days. The second tranche of 30-35 liters may come by February, when production can also be properly estimated,” the source said.

Explained

after rice and wheat

Rice, wheat and sugar were the three “extra” agricultural commodities. But the reduction in surplus has rekindled inflation concerns – and prompted the government to impose sanctions.

Mills are keen to start exports early for two reasons. The first is that Brazil’s sugar season, the world’s largest exporter, is from April to November. This gives a window of export for Indian mills, which crush from late October to early May.

The second is prices. White sugar for December delivery is currently being bid at around $538 a tonne. Indian sugar, being less white/refined, will fetch $50 quality discount or $488 (Rs 39,000) per tonne.

Deducting the cost of Rs 3,500 (for bagging, transportation from factory to port, stevedoring and handling) translates into an ex-mill price of Rs 35,500 per tonne. This is over and above the roughly Rs 34,000 that Maharashtra mills get from domestic sales of ‘S-grade’ (small-sized) sugar.

Indian mills are also exporting raw sugar, which fetches a 4 percent “polarizing” premium (to be more amenable to refining into whites) in the world market.

Raw sugar now costs 17.97 cents a pound in December, up from 18.69 cents or $412 (Rs 33,000) a tonne. The cost is also less by about Rs 500 per tonne, as raw sugar is shipped in bulk brake vessels, as compared to containers in the case of white.

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India’s sugar exports, which stood at just 0.46 liters in 2016-17 and 6.32 liters in 2017-18, rose to 38 lakh, 59.40 liters and 71.90 liters in the subsequent three sugar years, achieving an all-time high of 112 liters. was before. In 2021-22.

Droughts in Brazil in 2021 and Thailand a year earlier – and this year’s heat wave in the European Union – have created export opportunities for Indian mills. But whether they can seize it altogether now remains to be seen, given inflationary concerns.

On May 13, the Modi government had banned the export of wheat. On September 8, it banned the export of broken rice, besides levying a 20 per cent duty on shipments of other non-parboiled non-basmati varieties.

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