Sugar industry is afraid of a significant fall in sugar consumption due to COVID-19 as there is curb in social gatherings, weddings and celebrations have been postponed and people are staying away from ice creams and cold drinks to avoid falling sick leading to fall of domestic as well as international sugar prices. The pandemic is also likely to impact India's ongoing sugar exports even as a fresh demand for Indonesia gives hope to the sugar industry.
Global prices are down too by 22% in past 15 days as crude prices have dropped. "International prices have decreased by 22% in past 15 days, logistics is in shambles and buyers are shy of receiving sugar despite having contracted. Brazil is expected to increase sugar production has global crude oil prices have fallen. This can bring the global sugar prices down hampering India's efforts to export sugar," said Prakash Naiknavare, managing director, National Federation of Co-operative Sugar Factories.
The export price of white sugar, which was $425/tonne on February 24, has now come down to $355/tonne, while the price of raw sugar has declined from 15.3 cents per pound to 11.70 cents per pound during the same period.
"The ex-mills price we were offering to sugar miller for export has come down from Rs 2460/quintal to Rs 2150/quintal and there are fears about further decline to Rs 1900/quintal in near future," said Abhijit Ghorpade, a sugar broker from Maharashtra.
"The lock down as a precautionary measure, advisories on avoiding social and religious functions, public gatherings, postponing weddings is going to affect sugar consumption. News on various platforms advising people to avoid eating ice creams and cold drinks can cause consumption curtailment. As beverage and sweetener sector is the bulk consumer of sugar, it is likely to adversely affect the consumption," says the Federation in its letter to the government.
The Federation has demanded that the government should either differ or waive off the review of sugar export due in April, by which government forfeits the sugar export quota from mills which have not met the target set by government and redistribute it among sugar mills that have met the export targets.
The NFCFS has also demanded that the monthly release quota of 21 lakh allocated for March should be merged with the quota that will be released for April or the monthly quota for March should be extended by 15 days and a moderate quota for April should be released.
However, private sugar industry body Indian Sugar Mills Association is hopeful about pick up in India's sugar exports. "The fall in sugar production from Thailand to the tune of 5 million tonnes as compared to last year, and the recent decision of Indonesian Government to allow 600 ICUMSA sugar at a concessional import duty from India, Australia and Thailand, gives an additional opportunity to India to export large quantities of sugar to Indonesia," said ISMA in a release issued Tuesday.
"In addition, Indonesian Government has issued an additional import quota to its refineries and considering that sugar availability from Thailand is lower to the extent of 5 million tonnes, which will also reduce sugar exports from Thailand to Indonesia, the Indian raw sugar has a very good chance of getting exported to Indonesia. Hence, it is expected that sugar exports from India will again pick up soon," said ISMA.