After Indian government banned exports on some types of rice, many traders feel sugar may be the next commodity to be on the ban list. The sweet commodity accounts for 12% of the total world sugar exports while India is the biggest sugar consumer in the world.
Asian countries like Thailand, Indonesia, China, Cambodia, Japan, and S. Korea account for about around 60% of the global sugar imports. A large sugar croppage has been affected due to uneven rainfall across India’s agricultural belts.
This has raised concerns about lower sugar production, marking consecutive drop for a second straight year in the season starting October. Last year, total sugar production fell to India emerges as the world’s largest producer and consumer of sugar and world’s 2nd largest exporter of sugar.
EXPORT VALUE ACCRETIVE TO LOCAL PRODUCERS, MAY RAISE PRICES OVERSEAS
-The value of sugar exports from India amounted to over $5 billion in fiscal year 2022. A consistent increase in the value of exports of sugar was seen from financial year 2018.
– Sugar cane fields in the main producing regions of Maharashtra and Karnataka didn’t get adequate rain in June, leading to crop stress,. The group expects sugar output to drop 3.4% from a ye ago to 31.7 million tons in 2023-24.
– Wharile the domestic demand will still be suffice with the decline, if export rises than this can raise prices of sugar and jaggery-related products in the country. These will benefit sugar companies while it may hurt Oil Marketing Companies (OMCs) due to lower quantity available for ethanol mixing.
MANAGEMENT OF SUGAR COMPANIES EXPECT GOOD CRUSHING SEASON AHEAD, IF NO SEASONAL CHANGE OCCURS
– Balrampur Chini Mills Q1 = Profit rose 493% to Rs 73.5 cr; Revenue rose 28% to Rs 1,401.81 cr. Management expects ~10% increase in sugarcane crushing in the ensuing season, subject to weather conditions.
– Dhampur Sugar Mills Q1= Total income from operations up 41.4% to Rs 762.6 cr; PAT up 104.4% to Rs 60.7 crore
– Dalmia Bharat Sugar Q4FY23 YoY= Profit grew 24.50% to Rs 61.34 cr; Total income declined 9.50% in the June quarter of FY24 at ₹843.04 cr
– Bajaj Hindustan Sugar Q4FY23 YoY = Net loss rose 65% to Rs 74.3 cr; Revenue declined 11% to Rs 1,363 cr
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