Mills in north India sold their monthly quotas of sugar in May, but west and south Indian states have some unsold inventory left. The government has extended the sales window for the May quota and has released 1.85 mt of monthly quota for June. Analysts believe that sugar mills will be able to sell their entire quota and a marginal quota carried over from May by the end of this month.
“With demand picking up, sugar sales in the 2019-20 sugar season (October to September) may be at 25-25.5 mt, almost close to last year,” said Verma.
Sugar business contributes nearly 81 per cent towards mills’ top line, while distillation (ethanol) and co-generation (electricity) constitute 12 per cent and 7 per cent, respectively.
“Mills in Uttar Pradesh are sitting on high inventory due to bumper sugar production this year. Resumption in demand would help mills there offload a portion of inventory,” said Vijay Banka, managing director of Dwarikesh Sugar Industries.
Sugar production was reported at 26.82 mt, around 6 mt lower than the 32.75 mt reported at the corresponding period last year.
Isma estimates closing balance between 9.5-10 mt, which might rise to around 11.5 mt at the end of current season.
Sugar mills were able to sign export contracts of about 3.5 mt, out of the total quota of 6 mt for the current season.