The Indian Sugar Mills Association (ISMA), the leading trade body, stated that sugar output in the current 2021-22 (October-September) season is projected to be higher than original predictions at 314.5 lakh tonnes. ISMA estimated sugar output at roughly 305 lakh tonnes in its initial advance estimates in October.
Release of Second Advanced Estimates
The increased revision in ISMA's second advanced estimates, released on Monday, is based on the most recent satellite image-based crop assessment of the sugarcane area across the country during the second week of January 2022, as well as comments from sugar mill representatives. More distilleries are likely to be commissioned or expanded in the next year, therefore the second advance projections account for the diversion of additional cane to ethanol production.
According to the most recent forecasts, an additional 4 lakh tonnes of sugar equivalent will be diverted to ethanol production in the current season as a result of the distillery capacity development. Previously, roughly 30 lakh tonnes of sugar equivalent were expected to be diverted for ethanol production based on mill bids and as finalized by the Oil Marketing Companies (OMC) till the end of January 2022.
According to ISMA, mills in Uttar Pradesh are expected to generate roughly 102 lakh tonnes of sugar this season, compared to 110.59 tonnes the previous season. Lower cane yields decreased sugar recoveries, and more sugar diversion to ethanol production via diversion of B heavy molasses and sugarcane juice are all contributing to the predicted lower output. In UP, ISMA anticipates a greater cane diversion of 12.55 lakh tonnes of sugar, compared to 6.90 lakh tonnes in the 2020-21 sugar season.
ISMA predicts 117 lakh tonnes of sugar output in Maharasthra this year, up from 106.50 lakh tonnes the previous season. In comparison to the previous season, the predicted higher output is attributable to an increase in cane area of around 11%, as well as better cane yields and sugar recovery. This is due to favourable weather conditions and an increase in the percentage of ratoon cane, which aids in recovery.
Based on OMC allocations for ethanol supply in 2021-22 made so far and projected to be allocated in the current season, Maharashtra sugar mills are expected to divert roughly 11.27 lakh tonnes of sugar equivalent for ethanol production, compared to about 7.12 lakh tonnes the previous year.
Similarly, sugar output in Karnataka is predicted to reach over 45.21 lakh tonnes in 2021-22, up from 44.68 lakh tonnes the previous season. In Karnataka, like in Maharashtra, there has been an increase in cane area, as well as better cane yields and sugar recoveries, resulting in higher predicted sugar production for the current season. In the current season, Karnataka mills are expected to divert roughly 7.37 lakh tonnes of sugar equivalent for ethanol production, up from 5.02 lakh tonnes last season.
The three major sugar-producing states of Uttar Pradesh, Maharashtra, and Karnataka are expected to contribute over 92 percent of the estimated 34 lakh tonnes of sugar equivalent diversion into ethanol in the current season. ISMA further stated that sugar output in other states, which are anticipated to generate roughly 50.60 lakh tonnes of sugar and divert around 2.81 lakh tonne of sugar equivalent to ethanol production, has not changed much.
ISMA further stated that mills sold 69.06 lakh tonnes of sugar in October-December 2021, compared to 67.54 lakh tonnes in the same period the previous year. The domestic consumption of sugar is expected to be over 270 lakh tonnes in 2021-22, according to ISMA, with demand for sugar picking up nicely this year.
Increased Consumption
In terms of exports, mills have already shipped out 16.23 lakh tonnes in October-December 2021, compared to 4.49 lakh tonnes the previous season. With an additional 8 lakh tonnes of physical exports in January 2022, total shipments are expected to exceed 24 lakh tonnes by the end of the month. Because export contracts for roughly 40 lakh tonnes have already been inked, the market expects India to be able to sell 60 lakh tonnes this season by the end of September 2022.
Based on an opening stock of around 82 lakh tonnes on October 1, 2021, domestic consumption of 270 lakh tonnes, sugar exports of 60 lakh tonnes, and predicted production of 314.5 lakh tonnes, the closing stocks on September 30, 2022 are expected to be around 66.50 lakh tonnes.
