{"id":29576,"date":"2023-04-28T12:39:24","date_gmt":"2023-04-28T07:09:24","guid":{"rendered":"https:\/\/flattrade.in\/kosh\/?p=29576"},"modified":"2023-05-05T16:17:36","modified_gmt":"2023-05-05T10:47:36","slug":"lower-sugar-production-to-weigh-on-inventories-report","status":"publish","type":"post","link":"https:\/\/flattrade.in\/kosh\/lower-sugar-production-to-weigh-on-inventories-report\/","title":{"rendered":"Lower sugar production to weigh on inventories: Report"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"29576\" class=\"elementor elementor-29576\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-329a0dc2 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"329a0dc2\" data-element_type=\"section\" data-e-type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-6d135406\" data-id=\"6d135406\" data-element_type=\"column\" data-e-type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-7d814894 elementor-widget elementor-widget-text-editor\" data-id=\"7d814894\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>India\u2019s sugar inventories is likely to decline to its lowest since sugar season 2017 due to a sharp fall in production, according to rating agency Ind-Ra. The rating agency expects \u00a0the production to fall by about 5% YoY to 34 million tonnes (mt) in sugar season 2023, mainly due to a production decline in Maharashtra. The sugar season (SS) in India is from October to September.<\/p><p>Maharashtra which accounted for 38% of India\u2019s sugar production in SS2022, is likely to witness a sharp contraction of 17% YoY in SS2023 as rainfall is likely to reduce yields by 25%-30% (SS2022: 107 tonnes per hectare) in addition to a higher ratoon crop. Ratooning is a type of agricultural practice of harvesting a monocot crop (grass-like crop) by cutting most of the portion which is above the ground, but leaving the roots so that the plants recover and produce a fresh crop in the next season.<\/p><p>Moreover, Uttar Pradesh is likely to witness only a marginal increase in production (year-to-date SS23: 9.7mt, up 3% YoY) due to the state battling red rot infestations, challenging the future of the widely used CO 0238 cane variety, according to Ind-Ra. Besides, India is likely to divert 4 mt of sugar towards ethanol (SS22: 3.4 mt) which would contribute to the lower sugar production.<\/p><p>Nonetheless, the supply is expected to be adequate \u00a0to meet the domestic consumption demand with sugar inventories seen at around the normative carryover levels. Consumption is expected to rise by 2% YoY to 27.5 mt in SS2023.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-20d664d5 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"20d664d5\" data-element_type=\"section\" data-e-type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-60d9f254\" data-id=\"60d9f254\" data-element_type=\"column\" data-e-type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-58481a25 elementor-widget elementor-widget-heading\" data-id=\"58481a25\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Sugar availability<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-62235caf elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"62235caf\" data-element_type=\"section\" data-e-type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-3110607\" data-id=\"3110607\" data-element_type=\"column\" data-e-type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-cbe7b80 elementor-widget elementor-widget-text-editor\" data-id=\"cbe7b80\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>The rating agency said that India will have enough sugar inventories to meet the domestic demand as the lower production will be offset by lower exports of around 6 mt, significantly lower than 11.2mt in SS2022. Ind-Ra believes the government will not increase the export quota for SS2023 despite strong overseas market to ensure sufficient availability of sugar in the domestic market and prevent a rise in the prices in view of the lower opening stocks and production.&nbsp;<\/p>\n<p>The closing stock is likely to fall to around 5.5 mt (SS2022: 6.1 mt), the lowest since SS17 when a sharp fall in production led to the stock level plummeting to 3.7 mt. However, the stock is likely to remain largely in line with the normative carryover requirement, making it the only instance of a second consecutive season of domestic balance in the past decade.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-307c2877 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"307c2877\" data-element_type=\"section\" data-e-type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-21ef7c1c\" data-id=\"21ef7c1c\" data-element_type=\"column\" data-e-type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-3d28d060 elementor-widget elementor-widget-heading\" data-id=\"3d28d060\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Sugar prices in international markets to remain strong<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-4ce3a484 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"4ce3a484\" data-element_type=\"section\" data-e-type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-210068d1\" data-id=\"210068d1\" data-element_type=\"column\" data-e-type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-144d0f07 elementor-widget elementor-widget-text-editor\" data-id=\"144d0f07\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>Ind-Ra expects international sugar prices to remain strong in SS2023, although sugar price softens as Brazil\u2019s new crop hits the market in the next few weeks improving the supply position. International sugar prices hit a 10-year high in April 2023 with raw sugar prices climbing to about $550 per mt, up 25% YoY, and supplies from many geographies including India, Thailand, Europe and China declining more than industry expectations in SS2023.<\/p><p>Furthermore, logistic constraints in Brazil along with a late start to the crushing season owing to above-average rains have resulted in a tight global supply pushing sugar prices to the highest since 2011.<\/p><p>The agency also believes sugar production in Brazil is likely to increase 10%-12% YoY in the SS2024 season compared to SS2023 (36.5 mt) owing to an increase in the sugarcane crop as well as the sugar-ethanol mix owing to the high prices, driving an increase in the global surplus.<\/p><p>However, on the negative side, risks may arise from adverse weather events such as El Nino or an increase in the crude oil prices which could prompt Brazilian mills to divert more cane towards ethanol.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-7bce2ab6 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"7bce2ab6\" data-element_type=\"section\" data-e-type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-2cc5ea6a\" data-id=\"2cc5ea6a\" data-element_type=\"column\" data-e-type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-6503b4b5 elementor-widget elementor-widget-heading\" data-id=\"6503b4b5\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Sugar outlook in India<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-2af83e6d elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"2af83e6d\" data-element_type=\"section\" data-e-type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-472bb895\" data-id=\"472bb895\" data-element_type=\"column\" data-e-type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-25171343 elementor-widget elementor-widget-text-editor\" data-id=\"25171343\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>Sugar prices in domestic market is expected to remain range-bound in SS2023 as the domestic supply would remain sufficient to meet demand. Prices stood at about Rs 35\/kg, down 2% YoY year-to-date SS2023 and rose 3% YoY to Rs 36\/kg in April 2023 following the global cues and a lower domestic production.<\/p><p>The rating agency noted that sugar companies have witnessed rise in production costs in FY23 owing to a sharp increase in Uttar Pradesh\u2019s State Advised Price (SAP) in SS2022 and a gradual increase in the fair and remunerative price (FRP) of cane in SS2022 and SS2023, even as the minimum selling price of sugar remained unchanged at Rs 31\/kg since 2019.<\/p><p>In addition, a retrospective increase in minimum wages in Uttar Pradesh increased the cost of production and it is likely to weigh down on the profitability of sugar companies in FY23.<\/p><p>However, a gradual stock reduction and an increase in ethanol volumes would support the cash flows, according to Ind-Ra. . The rating agency added that cost of cane could rise in SS2024 with the likelihood of both FRP and SAP increasing. This would increase sugar prices leading to healthy profitability, according to Ind-Ra.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-7b03ab90 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"7b03ab90\" data-element_type=\"section\" data-e-type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-289c9082\" data-id=\"289c9082\" data-element_type=\"column\" data-e-type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-7f850c34 elementor-align-center elementor-widget elementor-widget-button\" data-id=\"7f850c34\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"button.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<div class=\"elementor-button-wrapper\">\n\t\t\t\t\t<a class=\"elementor-button elementor-button-link elementor-size-sm\" href=\"https:\/\/ekyc.flattrade.in\/openaccount\/?utm_source=Blog&#038;utm_medium=organic&#038;utm_campaign=Demat+Account\">\n\t\t\t\t\t\t<span class=\"elementor-button-content-wrapper\">\n\t\t\t\t\t\t\t\t\t<span class=\"elementor-button-text\">Open a Free Demat Account<\/span>\n\t\t\t\t\t<\/span>\n\t\t\t\t\t<\/a>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"India\u2019s sugar inventories is likely to decline to its lowest since sugar season 2017 due to a sharp&hellip;","protected":false},"author":5,"featured_media":29577,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"csco_display_header_overlay":false,"csco_singular_sidebar":"","csco_page_header_type":"","csco_page_load_nextpost":"","csco_post_video_location":[],"csco_post_video_location_hash":"","csco_post_video_url":"","csco_post_video_bg_start_time":0,"csco_post_video_bg_end_time":0,"csco_post_video_bg_volume":false,"footnotes":""},"categories":[65],"tags":[46,43,95,78,139,48,26,692,144,693,77,47,24,23,84,770,773,772,771,21],"class_list":{"0":"post-29576","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-industry","8":"tag-market-news","9":"tag-market-update","10":"tag-markets","11":"tag-nifty","12":"tag-nifty-futures","13":"tag-nifty-today","14":"tag-nse","15":"tag-opening-bell","16":"tag-options","17":"tag-pre-market","18":"tag-sensex","19":"tag-sensex-today","20":"tag-share-market","21":"tag-stock-market","22":"tag-stocks","23":"tag-sugar","24":"tag-sugar-cane","25":"tag-sugar-industries","26":"tag-sugar-mills","27":"tag-trading-account","28":"cs-entry","29":"cs-video-wrap"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.2 - 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