India to divert 3.5 lakh tonnes of export sugar to native market as costs surge
India, the world’s second-largest sugar producer, is dealing with a tighter provide state of affairs after a smaller-than-expected crop. Patchy rainfall and illnesses affected key rising areas.
Nonetheless, on Monday, Niraj Shirgaokar, President of the Indian Sugar Mills Affiliation, mentioned that there was no scarcity of sugar and costs had shot up on account of panic shopping for. “For 2025-26, the online sugar manufacturing is estimated at round 279 lakh tons, with a projected closing inventory of roughly 35 lakh tons. That may be a wholesome buffer towards regular home demand, even after accounting for the sugar, which is diverted to ethanol,” he mentioned.
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Extra Sugar To Attain The Market
Beneath the brand new guidelines, the federal government will permit 1 million tonnes of duty-free sugar imports. It is going to additionally permit processors to promote some refined sugar initially earmarked for export within the home market.
The discharge of export-bound shares would supply near-term reduction with out ready for imports to reach, the folks mentioned. Imports will nonetheless be wanted later, however the further provides may assist maintain costs in test till sugar from Brazil arrives.
Indian ex-mill sugar costs averaged Rs 67 a kg at their peak final week, based on Prakash Naiknavare, managing director of the Nationwide Federation of Cooperative Sugar Factories Ltd.
Costs have since fallen to round Rs 54-55 a kg, following the federal government’s Aug. 20 announcement permitting duty-free imports, Naiknavare mentioned.
“Costs will calm down additional on account of well timed and efficient intervention by the federal government,” he mentioned. “This can give reduction to customers throughout festivals.”
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Value Rise Due To Speculative Habits
On Monday, ISMA President Shirgaokar had mentioned that retail costs had risen on account of “stocking” and “speculative behaviour”.
“Whereas retail costs have moved from round Rs 48 per kg in July to roughly Rs 55-56 per kg this month. An increase of about 16%. That enhance isn’t pushed by any precise shortfall in availability. The rise displays a number of components coming collectively. Home output for the season got here in under the preliminary projections primarily because of the weather-related results, decrease cane yield, and decrease restoration, together with a better crush fee in Maharashtra and purple rot-related varietal points in Uttar Pradesh.”
Shirgaokar additional mentioned that competition season shopping for had additionally picked up. Globally, he added, decrease estimated sugar manufacturing in Brazil has tightened provides and pushed worldwide costs from round $474 a ton in June to round $552 a ton in August.
“However the largest contributor has been speculative habits. This has been occurring for the previous couple of weeks, and what’s occurring is that some bulk consumers, who would usually procure simply in time, have begun stocking. This stocking, which is occurring a month and a half or two months upfront, has pulled sugar out of circulation. It stays within the go-downs, creating a man-made tightness that has nothing to do with precise availability,” the ISMA president mentioned.
