Sugar production to be lower this year; prices won't go up higher, says Abinash Verma of ISMA


Abinash Verma, MD, Indian Sugar Mills Association (ISMA) talks to ET Now about outlook of Sugar industry. He said that the sugar production will be lower than the last year and the prices are not likely to go higher from here in the near future. Edited excerpts.

ET Now: Sugar prices are expected to rise due to less production. How do you see sugar prices moving in future because much contrary to what raw material sugar was doing, it is already at a 10-month low, it seems like this is going to continue to keep sugar prices at a high?

Abinash Verma: Let me straightaway clarify that there are no surprises in the last one month or so. Surprises on the sugar production front came up probably in the end of January and the beginning of February so it is not a surprise anymore and therefore the market is already aware that the sugar production is going to be lower this year. The production is expected to be around 20 million tonne this year. ISMA is expecting it to be slightly more than that and therefore I do not think the sugar prices are going to move up higher from here.

Secondly, in about last 30 days, the sugar prices have in fact dropped -- about Re 1 to Re 1.50 per kg -- across the country. So, if this fall gets corrected and there is an improvement in rupee, I do not think the sugar prices will go up too much.

ET Now: Supply is not going to be strong, demand is coming back yet sugar prices are down, do you think it's global phenomenon, it has nothing to do with India?

Abinash Verma: It is basically Indian phenomenon. In the first three months of the season we could not sell because there was lack of currency in the market due to demonetisation. Sugar is mostly bought through cash and in fact the sugar sweetened products like chocolates, cakes, biscuits or beverages are also bought in cash. Secondly, there is a drop in last couple of months in the sugar off take by the bulk consumers and lastly, in February and March, the sugar mills are reporting a d ..


Readers choice: TOP-5 articles of the month by UkrAgroConsult