Indian sugar prices have been on the rise, increasing by over 6% in just two weeks. Experts in the industry suggest that prices are likely to continue climbing due to the anticipated decrease in sugar production and the surge in demand from bulk consumers during the peak summer season.
This hike in local sugar prices will benefit sugar makers like Balrampur Chini, Shree Renuka Sugars, Dalmia Bharat Sugar, and Dwarikesh Sugar by enabling them to make timely payments to farmers, it could lead to food inflation, thereby deterring the Indian government from allowing additional sugar exports.
Ashok Jain, the president of the Bombay Sugar Merchants Association, attributed the surge in sugar prices primarily to the decline in production in Maharashtra, India’s top sugar-producing state. According to industry estimates, Maharashtra is expected to produce only 10.5 million tonnes of sugar in the 2022/23 marketing year, down from an earlier forecast of 13.7 million tonnes.
Jain anticipates that the demand for sugar from bulk buyers will increase in the upcoming months due to the summer season, which typically sees a rise in the consumption of cold drinks and ice cream in India. The wedding season also contributes to the demand for sugar during this time. The demand for sugar has bounced back after being impacted by the COVID-19 pandemic last year, and it is expected to hit a record high of 28 million tonnes this marketing year, as per a Mumbai-based dealer from a global trading firm.
Although the Indian government has allowed the export of only 6.1 million tonnes of sugar by mills in the current season, down from the previous season’s record of 11 million tonnes, the dealer believes that the government is unlikely to permit additional exports due to the projected drop in closing stock for the season, which could be the lowest in six years, at around 5.5 million tonnes.