Sugar mills in Uttar Pradesh are expecting higher recovery from cane this year. Average recovery of sugar was a record 10.67 per cent last year. This year, in some cane blocks, it is reportedly 1-1.5 percentage points more, though almost similar to last year in the others. The industry, therefore, estimates average increase in recovery by 0.5 percentage points.
“With liquidity getting easier day by day (after the initial demonetisation upset) and the price remaining elevated, we can certainly expect profitability for UP mills to be higher this year,” said Deepak Guptara, secretary, Uttar Pradesh Sugar Mills Association.
The Indian Sugar Mills Association estimates output in UP at 7.66 million tonnes for crushing season 2016-17, from 6.84 mt the previous year. A second set of satellite images reveals this year’s cane sowing as almost similar to last year at 2.31 million hectares.
Isma recently forecast, “Though there was poor rainfall in the initial months of the monsoon, rain in the latter part would help in sugarcane yield, resulting in higher production in sugar season 201617. Since mills have cleared the cane price (payment arrears) of farmers to a large extent, it is expected that the cane diversion to other sweeteners like gur and khandsari might fall. Since the acreage under the high yielding and high recovery variety is much more than last year, cane availability for sugar production would remain higher this year.”
Sugar mills’ realisation shot up to Rs.36.50 a kg till demonetisation was announced on November 8, due to lower production estimates this year and a sharp increase in the sweetener's prices globally. The currency crisis weakened sentiment and consumer demand, and mills’ realisation slumped by Rs.1.5-2 a kg, due to the lack of lifting of inventory by stockists.
“Apart from that, new season sugar has also come into the market, resulting in last year’s stock selling at a discount. According to industry sources, some cash–crunched companies are selling their inventory desperately. Also, buying at the retail level is much lower. Bulk consumers have also reduced their offtake,” said an industry source.