Sugar prices may increase in the coming months. In fact, Crisil Research has said in a report that sugar production may decline due to adverse weather conditions in parts of Maharashtra and Karnataka. Due to this, the price of sugar is expected to increase by 8 percent. According to Crisil, the price of sugar may increase to Rs 33-34 per kg in the season up to September 2020. Let us know that the Chinese session is from October 2019 to September 2020.
10% production reduction
It has been reported in the report that there can be a 10 percent reduction in sugar production. Apart from this, due to a 20 percent increase in exports, sugar reserves may also fall. According to the report, after the announcement of lump sum export subsidy, sugar exports for the session 2019 are estimated to be 38 lakh tonnes, which may increase to 45 – 50 lakh tonnes in the session 2020. Due to this, there is a possibility of an increase in sugar prices.
In fact, for the session 2019, the government had decided to provide a transport subsidy of Rs 1,000-3,000 per tonne for the sugar exported as well as a raw material subsidy of Rs 139 per tonne for sugarcane. Transportation subsidy of Rs 1,000-3,000 per tonne on exported sugar will be decided based on the distance between the nearest port from the exporting sugar mill.
Overall, this subsidy will be Rs 2,300-4,300 per tonne on exported sugar. However, Crisil believes that it is not easy to achieve the export target of 6 million tonnes of sugar. In fact, sugar prices are expected to remain weak in the international market due to more global reserves.