Amid forecasts of a bountiful monsoon, the domestic sugar production is estimated to touch 30.5 million tonnes (MT) in the next 2020-21 crushing season, which would be 12 per cent higher than estimated production of 27.2 MT in the current 2019-20 cycle.
These projections have been made by the Indian Sugar Mills Association (ISMA) based on the satellite images taken this month and assuming normal rainfall and other ‘optimum conditions’. The pan India cane acreage has been pegged at 5.23 million hectares (MH) in 2020-21, which is 8 per cent higher than 2019-20 season’s cropped area of 4.84 MH.
Due to higher cane availability and surplus sugar production, it is also estimated that a larger quantity of cane juice and B-molasses will get diverted for ethanol in Uttar Pradesh, Maharashtra and Karnataka.
In its report today, ISMA projected the diversion to ethanol will help keep sugar production contained by 1.5 MT to 30.5 MT in the next season. Last year 0.8 MT of notional sugar production diverted this year.
However, a clear picture of such diversion would emerge after the bids are placed by millers for ethanol supplies, sometime in September 2020.
With an opening balance (OB) of 14.5 MT in October 2019, estimated sugar production for of 27.2 MT, expected domestic sales of 25 MT and exports of 5.2 MT during the current season, the opening stocks in October 2020 has been estimated at 11.5 MT.
Although, the OB in October 2020 will be 3 MT lower than the corresponding month last year, yet the OB of 11.5 MT would be 6.5 MT more than the domestic requirement for the initial months of the coming season until the new fresh sugar supply hits the market.
“Since, we expect higher production in 2020-21, India will continue to export 6-7 MT of the surplus sugar during 2020-21. With Thailand’s sugar production to further fall in next season, beyond the 6 MT dip in current season, there is an opportunity for India to export sugar to the Asian countries,” the ISMA report added.
After considering rainfall activity in July–September, 2020, water situation in reservoirs and satellite images in September 2020 across India, ISMA will review the analysis and release its 1st advance estimates for 2020-21 season. By that time, the crop will be more mature and there will be more clarity on the rainfall and water availability, as also the ethanol supply bids from cane juice and B-molasses.
Uttar Pradesh is expected to remain top sugar producer with 12.3 MT vis-a-vis 12.65 MT in the current season. This year, UP had witnessed 0.6 MT of additional sugar production because the diversion of cane to gur/khandsari units were lower since they were shut following lockdown.
The pan India ethanol blending in petrol stood at 4.97 per cent up to June 15, 2020. This is despite lower production of sugarcane and molasses due to drought in Maharashtra and Karnataka. According to ISMA, the 3rd tender was floated for more ethanol on June 1, 2020 at the same prices decided by the Centre in July 2019, while the bids are expected to be opened soon, which will further increase supplies.