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New Delhi: Investment information firm ICRA has said that domestic sugar production estimates for season year (SY2020) have been revised downwards by 7.8 percent to 26 million tonnes from the earlier preliminary estimate of 28.2 million tonnes.
This along with the expected exports of 3.5 million tonnes (as against the government’s target of 6 million tonnes) in SY2020 is likely to improve the demand-supply situation in the domestic market, thus supporting the sugar prices in the near term.
“We expect the closing sugar stocks for SY2020 at around 10 to 10.5 million tonnes post downward revision of the sugar production estimate as against 12 to 12.5 million tonnes earlier,” said Sabyasachi Majumdar, Senior Vice President and Group Head at ICRA Ratings.
“Hence, the domestic demand-supply situation will relatively be better, supporting the sugar prices in the near term, which are currently hovering around Rs 33 to 34 per kg.” Further, the fair and remunerative price (FRP) is fixed at Rs 275 per quintal in SY2020 which is the same as that in the previous year. This non-increase in FRP sugarcane price is a saving grace for the sugar industry in the face of the supply-induced pressures, said Majumdar.
The production is likely to be lower by 21 percent when compared to 32.9 million tonnes in SY2019.