Date:22/06/2005 URL: http://www.thehindubusinessline.com/2005/06/22/stories/2005062201341000.htm

Back Sugar prices seen firm on growing demand

Dhimant Bhatt

Mumbai , June 21

SUGAR prices in the country may remain firm in the next few months due to an upturn in demand amidst lower supply.

Industry sources said overall demand during the current season 2004-05 (October/September) was expected to grow by about six per cent annually, but supply may be down 11 per cent due to lower opening stock and a shortfall in the cane crop as compared to the previous season.

Sugar production during the current season is estimated to be lower at 125 lakh tonnes from last season's 140 lakh tonnes, according to Indian Sugar Mills Association (ISMA) figures.

During the current season, the total availability of sugar, including opening stock of 85 lakh tonnes and white sugar converted from imported raw sugar (approximately 2 million tonnes), would be around 230 lakh tonnes.

"It appears to be adequate only to meet the current season's estimated domestic requirement of 185 lakh tonnes, but would also leave lowest carryover stock (in last 20 years) of 45 lakh tonnes to the next season," an industry sources said.

The total requirement was around 173 lakh tonnes for last season 2003-04.

"Looking at the current scenario, overall sugar prices may hover around Rs 1,700 per quintal in the near term," Mr Sanjay Tapriya, Director (Finance), Simbhaoli Sugar Mills Ltd, told Business Line.

The industry has so far imported 1.68 million tonnes of raw sugar mainly from Brazil at the landing cost of around $230-260 per tonne (c.i.f. basis) and may touch 2 million tonnes by end of the season, sources said.

"In the world market, demand-supply of raw sugar is tight due to stagnant production and rising demand in South-East Asia," Mr Tapriya said.

Indian demand for raw sugar has also impacted world prices, which have gone up nearly by 50 per cent in the last 8 months.

The Government and the industry are working with mutual understanding of addressing and bridging the demand and supply gap on a consistent basis.

Raw sugar processing in the country can result in India emerging as the future supplier of white sugar to South East Asian countries and neighbouring countries such as Sri Lanka, Pakistan and Bangladesh, which are deficient in sugar, he said.