“Ethanol Blending Program Will Dramatically Reduce Surplus Sugar Inventories”

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India’s excess sugar stock is expected to drop significantly to less than one million tonnes (mt) over the next four years, from 5.2 mt last year – thanks to the success of the ethanol blending program with industries diverting sugar cane for direct conversion to biofuel.

Participation in the Commodities Market Outlook 2022 event organized by Activity area On Thursday, Ravi Gupta, director of Shree Renuka Sugars, said India will remain a net exporter until 2023-24 (October-September), although the volume may drop to 0.5mt.

On the other hand, the sugar (sugarcane equivalent) diverted to make ethanol is expected to drop to 5.2t in 2023-24 from 2.1t in 2020-21, Gupta said.

Regarding the sugar balance for the current season, he said that exports should fall to 6 t against 7.2 t last year and production to 30.5 t against 31.2 t. Domestic consumption could reach 26.5 t (26 t), he said.

Exporters are getting cautious

Commenting on the global scenario, Gupta said importing countries should look to India for their sugar supply as there is a global deficit, which is expected to continue to grow. Indian exporters are said to have already contracted around 3.3 mt for shipments since the start of the current season.

However, exporters have adopted a policy of waiting and vigilance to secure new export contracts, with prices on world markets falling below multi-year highs seen through October.

“Indian mills are in no rush to sell sugar as previous sales have yet to be completed. Moreover, they don’t like current world prices, which will have to rise to attract more Indian sales, ”said Praful Vithalani, president of the All-India Sugar Traders Association (AISTA). Activity area Last week. According to AISTA, 0.94 mt has already been shipped with raw sugar amounting to 0.47 mt.

Reduced cane arrears

Gupta said the sugar market will follow crude prices, which is normal in a sugar deficit year when production falls below consumption, as ethanol and crude oil “go hand in hand.”

“Ethanol performed independently of crude when there was a global sugar surplus in 2018 and 2019,” he said.

Regarding the domestic ethanol scenario, the director of Shree Renuka said that this is the main factor in reducing the arrears of sugar cane, as almost all (from 2020-2021) has been paid except in a few cases where factories are in financial difficulty.

Last week, the government informed Parliament that only 4,445 crore, or 4.8 percent of the total 92,881 crore, was due in the 2020-21 season. The arrears of the last five years represent less than 2% of the total contributions.

Amid growing demand to help farmers diversify from energy-intensive crops such as sugarcane and also the government’s recent decision to allow the production of ethanol from food grains, Gupta said that the two systems (sugar and grain based plants) will coexist according to government objectives. 20 percent ethanol blend with gasoline by 2025-2026 for which the need will be around 10 billion liters.

Sugar and grain factories will contribute equally to achieving this targeted production, he said.

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