New Delhi [India], Aug 20 (ANI): Sugar export prospects appear encouraging for next sugar season (SY2022) in light of recent surge in international raw sugar prices to around USD 430 per tonne in August — the highest levels in past four years — rating agency ICRA has said.
The international prices of raw sugar have been on an upward trend since February from around USD 340 per tonne.
The release of sugar production data for Brazil, the largest producer of commodity globally, in August by UNICA conveying a drop of 7.3 per cent year-on-year (at 304 million tonnes for the period of April-July in south central region and resultant compression in global surplus in ongoing sugar season 2021-22 underpinned price rally in past few days.
This coupled with other favourable factors will benefit domestic sugar industry, said ICRA.
Sabyasachi Majumdar, Senior Vice President and Group Head at ICRA, said Indian sugar industry could turn out to be a direct beneficiary of decline in the Brazilian sugar production.
“The firmed up global prices along with wider export market to cater especially neighbouring countries amid logistics challenges pertaining to rising ocean freights, container shortages as well as port closures augers well for the industry,” he said.In the backdrop of estimates of normal sugar production at around 31 million tonnes (post ethanol diversion), encouraging export prospects coupled with higher expected sugar diversion towards ethanol will allow sugar companies to reduce stock levels and thus improve cashflows along with reduction in debt burden, said Majumdar.
Anupama Arora, Vice President and Sector Head at ICRA, said subsidy traditionally made exports viable for India which aided the economy to maintain the domestic sugar demand-supply balance in addition to timely stock liquidation and improved liquidity.
However, recent firmed up prices have made exports feasible even without subsidy. “With exports under OGL already getting contracted, the export prospects look promising for upcoming sugar season even if the subsidy moderates from current levels,” she said. (ANI)