Sugar Stocks Slide As Higher Output In India Will Add To Global Glut
India will add to the global sugar glut as October-February output rose 42 percent on a yearly basis on higher cane acreages due to better monsoon rains.
India produced 23.05 million metric tonnes of sugar in the current season compared with 16.26 million a year ago, according Indian Sugar Mills Association. That’s because crushing operations started much earlier and at full capacity compared with last year on higher cane production.
Shares of sugar producers extended their decline as the increased output is expected to bring down prices further. They have fallen nearly 7 percent so far in 2018 to Rs 3,500 a tonne, the lowest in four years. And that’s after the government hiked the import duty from 50 percent to 100 percent and restricted inventory levels with mills for February and March.
On Wednesday, Indian Sugar Mills Association (ISMA), representative of India's private sugar mills, has revised country's 2017-18 sugar production upward by about 13 percent at 29.5 million tonnes from its second advance estimate of 26.1 million tonnes.
Global sugar supply is expected to surpass demand by 6 million tonnes this season and another 4-6 million in the next, Bloomberg reported quoting Cofco International Ltd., the trading arm of China’s largest food company. Given that a higher sugar output is expected in the next season as well, India needs to export at least 1.5 million tonnes in the next six to seven months, the sugar millers said.
Mills in Maharashtra and Karnataka, the largest cane producing states in India, have already started shutting operations, they said.