InvestorQ : Why are sugar companies talking about exports despite the demand and supply being largely matched in this season?
Neelam Naik made post

Why are sugar companies talking about exports despite the demand and supply being largely matched in this season?

Answer
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Anu Biswas answered.
2 months ago


The Indian sugar season stretches from October to September and normally sugar output is measured during this cycle. In the current year, the Indian sugar sector is expected to export close to 5.50 million tons, the highest level of exports in the last 12 years.

Let us look at the output of sugar first. Maharashtra improved sugar output by over 40%, but sugar output in UP was flat due to lower acreage. Total sugar output this year is expected to be 27.2 MT, almost 15% lower than the average output in the last 2 years.

While sugar output has been tepid, the demand was also weak. Demand for the year is estimated at 27 MT. This is lower than last year and largely because industrial demand, which constitutes 60% of sugar demand, will be lower by 15% this year.

Corporate demand for sugar got hit as restaurants, malls and cafes remained shut. There were also disruptions in production at cola bottlers, beverage makers and confectioners. This took a toll on consumption, despite the household demand being just 2% down.

With the demand and matched, the story boiled to closing stocks, which stand at 14 million tonnes of sugar. That remains an overhang on the price, The export of 5.5 MT will at least reduce this overhang of inventories in the Indian sugar market and hold prices higher.