Domestic sugar consumption is likely to increase by 2-3 percent to around 25.8 million metric tonne (MT) this year and the production would be higher by at least 6.5-7.0 million MT, said rating agency ICRA.

It added, “Sugar production in SY2019 is expected to be marginally higher at around 32.5-33.0 million MT when compared to 32.2 million MT in SY2018. Assuming that there was 3-3.5 million MT of exports during SY2019, the closing stocks still would continue to remain high at around 14–14.5 million MT.”

Source: ICRA Research, CEA

“With the commencement of the cane crushing season, the supply pressures on the prices continue. Prices declined to Rs. 31,000/MT (ex-mill UP) in November 2018 and to Rs. 30,000/MT in December 2018. In January 2019, the prices were around Rs. 31,000-32,000/MT”, the report said.

Furthermore, the government increased the minimum selling price (MSP) of sugar to Rs. 31,000/MT from Rs. 29,000/MT (announced in June 2018), to support the oversupply-hit sugar industry. Sugar prices are at around Rs. 31,000/MT in February-April 2019, however are currently hovering around Rs. 33,000-33,5000/MT, said the rating agency.

On the international front, the rating agency said that the international sugar prices have largely followed expectations on global supplies. While the prices marginally increased to $350/MT in February 2019, they declined to $337/MT in March-April 2019. They are likely to remain subdued due to the expectations of a continued oversupply of sugar in the global market, albeit lower than anticipated.