Sugar output to drop, prices may rise

It’s bad news for sugar consumers as domestic sugar production is expected to decline by 11 per cent year on year during the sugar year (SY) (Octo-ber-September) 2016 and 4-8 per cent to 23-24 million tonnes during SY2017.

“While it is too early to estimate the sugar production for the SY2017 season, based on the cane plantation and expectations on monsoons, ICRA estimates the sugar production to decline by anywh-ere between 4-8 per cent to 23-24 million tonnes range during 2017.” it said.

Decline in sugar production along with exports is likely to result in a closing stock of around 7.6 million tonnes, a significant 20 per cent YoY decline.

After a period of over seven years, there was a rebound in global sugar prices during January 2016 following expectations that global production will fall short of consumption in 2015-16.

The government on Thursday had taken steps to stem the rise in sugar prices by making exports expensive. However the expected supply deficit of around five million MT for the current 2015-16 year is owing to unfavourable we-ather conditions continue to affect sugar output from northeast Brazil, India and Thailand. says ICRA.

Fully integrated units have a profitability cushion as by-product sales are supported by healthy off-take and pricing for alcohol and power.