The end of year celebrations did not brighten up the sugar sector, with sales mostly remaining moderate. Mukesh Kuvadiya, honorary secretary of the Bombay Sugar Traders Association, said changing preferences and lifestyles have actually seen festive demand for sugar drop by around 20-30% over the past five years or so.
“Instead of candy, people now prefer clothes, dried fruits or gadgets as gifts during the holiday season. Thus, over the past five years, we have witnessed a gradual decline in the festive demand for sugar, ”he said. While sales remained declining, sugar prices did not take up much space either.
Mill sugar prices have hovered around Rs 3,100 to Rs 3,200 per quintal in most areas of Maharashtra. With the start of the 2019-2020 sugar season in the next few days, factories that wanted to increase their ethanol production also faced an economic lockdown in the form of very high prices for molasses – the mother liquid left after l extraction of sugar – which is the basis for the production of ethanol. Currently, molasses prices are around Rs 10,000 per tonne, which the millers say will make ethanol production unsustainable.
Earlier this year, the central government set the price of ethanol at around Rs 60 per liter and also authorized the production of ethanol directly from cane juice, sugar and molasses. Bhairavnath B Thombare, president of the West India Sugar Mills Association, the umbrella body for private millers in Maharashtra, stressed that current prices are mainly due to limited availability. “Once cane crushing begins, prices are expected to come down, but given the cane shortage, ethanol production may still not be viable at current selling prices,” he said. Compared to the 40 lakh tonnes of molasses produced by the state, production is expected to be around 22 lakh tonnes.
Recently, when the oil companies put out tenders for the purchase of 510 crore liters of ethanol for their blending program, bids for only 110 crore liters were made. Most factories would prefer to produce both white and raw sugar rather than diverting their juices for ethanol. The Ethanol Center’s push is to meet its 10 percent blending target to lower import bills and help the sugar industry escape the perennial problem of overproduction. The current sugar season is to start with an opening stock of 145 lakh tonnes of sugar, which has reduced the risk of rising sugar prices.
Referring to the export contracts of 30,000 tons of sugar, signed with Iran by the millers of Maharashtra, Kuvadia said, “This contract is for sugar produced in 2018-19,” he said. The Indian government has set a target of 60 lakh tonnes for exports, but Kuvadia said around 50 lakh tonnes will be exported in the next season. “The figure will become clear once Brazil begins operations,” he said.