Indian sugar mills association

Global shortage could further sweeten sugar cos’ rally on bourses

Date:	14 Jun 2019

Source:	The Economic Times

Reporter:	Ram Sahgal

News ID:	40313

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Mumbai: Domestic sugar companies, some of which generated stupendous returns over the past one year, could continue outperforming benchmark indices, like the Sensex, in the coming months. The projections of outperformance are based on the sweetener moving from a global surplus of 4 million tonnes to a global deficit of 4 million tonnes in the next sugar season, according to Abinash Verma, DG, Indian Sugar Mills Association (ISMA). Even those companies whose stocks have bled might experience some relief.

This projected global deficit – because of falling sugar output in the Europe Union, Thailand, Pakistan, etc -- and could help India reduce its estimated record carry-forward stock of 14.5 million tonnes by October 2019 – the sugar season is from October-Sepember – through exports. “This (exports) will benefit the entire sugar sector,” said Verma who added that it was “still premature” to estimate the extent of global price rise.

sugar-graph

However, the government will apportion the export of every mill in the coming season (2019-20) based on sugar output of the country. Comments of the Maharashtra cane commissioner suggest that Maharashtra – the country’s secondlargest sugar producing state after UP – could experience a 40 per cent drop in output from current marketing year’s output of 10.7 million tonnes.

However, a sugar industry source said exports would be an ideal way to drawdown the huge carryforward stocks that has kept a lid on prices. The retail price of sugar in Mumbai was Rs 39 a kilo on June 12, down Rs 2 from a year ago, according to consumer affairs’s ministry data.

ISMA’s Verma also added the sugar body’s forecast on output in the next season would be released on July 1.

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