No Shortage Of Sugar In India, Prices Will Soon Ease, Says ISMA
India does not have a shortage of sugar despite the sudden surge in the sugar price, the Indian Sugar and Bio-Energy Manufacturers Association (ISMA) clarified on Monday. The industry association estimates that sugar prices will remain steady and fall in the next few days as speculative purchases have slowed down.
This clarification is part of the trend of escalating sugar prices, which are currently higher than usual in the country before the festive season kicks in, marking an increase in the demand for sugar. The recent price hike was largely due to ‘speculative stocking’ and not a shortage of the sweetener, ISMA said.
Sufficient sugar stocks, says ISMA
The country has enough sugar for the festival as well, said ISMA president Niraj Shirgaokar. He cleared that, “India does not have a sugar shortage and the supply situation is fundamentally strong.” There is an increase in sugar demand during the month of August to November, mainly because of festivals like Ganesh Chaturthi, Dussehra and diwali.
The production of sugar in India during the marketing year (October 1st to September 30th) was approximately 27.9 million tonnes and the domestic consumption was estimated at 28-28.5 million tonnes. About 3 million tonnes of sugar was used for ethanol production and approximately 800,000 tonnes was exported beyond the 2 million tonne limit.
New marketing year opening stocks should be around 3.5 MT compared to 5 MT a year ago. However, ISMA has maintained adequate supplies, despite the lower inventory.
The pressure is expected to be relieved by duty-free imports.
The Centre has also granted permission for raw sugar imports with no duty for 1 million tonnes with a view to provide better market sentiments and augment domestic availability. Some imports are due in before the 15th of October which may bring some buyers relief.
The government has also taken measures to curb overaccumulation. Following this, the bulk consumers with consumption above 10 tonnes per month will be allowed to store 15 days worth of sugar from September 1 to November 30.
Prices May Ease As Speculation Declines
Sugar prices have also escalated in the past few weeks, with wholesale sugar prices hitting historic highs in key markets. But with some speculation in the stocks melting and more supplies coming in, ISMA believes pressure will ease.
According to the industry body’s assessment, consumers might get some respite in sugar prices in the near future, but the demand during the festive season and new supplies coming into the market will play a crucial role.