ISMA (International Securities Market Association), expects the sugar prices is tended to rise up in next season, as sugar production may drop from 33 million tons to 28-30 million tons.
Abinash Verma, Director General, ISMA, in an interview with ETNOW, explained, “After two years of surplus sugar in the international market, we expect a deficit of anywhere around 2-4 million tons in the next season on the international front and therefore the prices should move up from the current levels globally”
He continuously said, “There was a glut in the international market. The season which is closing now, which is on till 30th of September 2019, also showed a surplus of about 4-4.5 million tons in the international market.”
So, next year, that is 2019-2020 sugar season starting on 1st October 2019, will see a deficit, believe all the experts. After two years of surplus sugar in the international market, we expect a deficit of anywhere around 2-4 million tons in the next season on the international front and therefore the prices should move up from the current levels globally.
As for the domestic market, India has continuously produced 32-33 million tons in the last two seasons, including the current one — 32 and 33 million tons each. The demand has been around 25.5 to 26 million tons in each of these years and therefore the inventory balance in the current season from about 10.7 million tons as on 1st October 2018, is expected to go up to about 14.5 million tons by the end of this season.
However, there are drought like scenario in Maharashtra and north Karnataka, especially in some of the sugarcane producing belts in those regions, and therefore next season, it was expected sugar production to drop from 33 million tons in the current season to 28-29 million tons or 30 million tons. There will be estimate on 1st of July 2019.
Abinash Verma said, “I firmly and very strongly believe that we have seen the worst in the current season. I have reasons to say that; number one, from about 10.7 million tons of opening stocks in the current season, we will be starting the next season with about 14.5 million tons. But the cane commissioner of Maharashtra is talking about a drop of almost 4 million tons in the next season from Maharashtra alone.”
The market situation suggests that from about 33 million tons, it will drop to about 28-29 or 27 million tons. There is an expected deficit of around 4 million tons in the next season which gives an opportunity to India to export into the international market.
Abinash Verma, said “in India, we are trying to target and export almost 7 million tons in the next season and therefore if the production in the next season is more or less similar to consumption, next year we expect the opening stocks of 14.5 million tons to drop to about 8 million tons by the end of the next season.”
Therefore, stock balance, inventory balance which is blocking almost about Rs 45,000 crore today will come down to about 8 million tons which will block our working capital to around Rs 20,000 crore. I feel the situation will be much better in the next season.
Therefore, if we are able to find the route through the river route into Bangladesh as exportation, and if that river route develops, Uttar Pradesh will be able to export a large quantity into Bangladesh through the river route next season.