Insight Focus
Domestic Indian sugar prices are currently trading at INR 38,200/tonne. Both raw sugar and white sugar export margins remain negative.
Maharashtra Sugar Imports/Exports
Domestic sugar prices remained stable throughout June at INR 38,000/tonne. Prices have since gone up to INR 38,400/tonne at the start of July and are currently trading at INR 38,200/tonne.
World sugar market prices have rebounded slightly but it has not been enough to make exports viable. The raw sugar and white sugar export margins remain negative as mills would earn 2.8c/lb below the domestic market for exporting raw sugar.
Mills would earn USD 32/tonne below the domestic market if they were to export their white sugar today.
Indian sugar production has come out below sugar consumption this season. Most local observers believe stocks are sufficient to meet consumption in 2025. Government release orders also suggest that consumption last season was not as strong as initially anticipated adding to available stocks.
The onset of the monsoon has been earlier than usual this year and is progressing well so far. This should be beneficial for cane growth especially in Maharashtra and Karnataka.
Ethanol vs Sugar
Many mills/distilleries have a choice over which feedstocks they use to make sugar or ethanol based on the relative prices of ethanol paid by the oil marketing companies.
The Indian government has raised prices for C-molasses by 3% for the 2024/25 season from (Rs.56.58 to Rs.57.97) to ensure that there is enough ethanol for the Ethanol Blending Program (EBP), as the 20% ethanol blending target is due this year.
Like the current season, the government had incentivised C-molasses production in the previous season to ensure that there was enough sugar supply for domestic consumption as food security was a priority for the government at the time.
A large proportion of ethanol for this season is also coming from grains and pent-up rice stocks as there is a lack of sugarcane available this season to meet the 20% blending target.
The revenue generated by the mills based on the type of feedstock used can be seen in the chart below:
Here are the current prices paid for ethanol by feedstock:
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