In an interview to CNBC-TV18, M Manickam, MD of Sakthi Sugar talked about his view on international prices and the company's domestic production in Q3. He said "We expect Brazil to produce more raw sugar next year. There would be a lot of pressure on the raw sugar prices. It may come down a little further and Indian production will be either stable or lower."
Below is the edited transcript of his interview with CNBC-TV18.
Q: What is the realization that you have made this time? What is the trajectory you are looking at for domestic prices? Do you see it stabilize at current levels? Could there be a slight downward pressure as crushing progresses?
A: We expected current price to bottom this quarter. Possibly there could be an upside going forward, because both UP and Maharashtra have not started crushing as yet. I think they will probably start after November 20. This means we will be about a million tonnes already down, over last year. Production estimates are around 24 million tonnes or could be lower. If that happens, it is good for the prices.
Q: We had the Rangarajan Report come out. What is your sense? When exactly do you think implementation could possibly come through by the government with regards to the report?
A: We were expecting they would not do anything to change the sentiments before Diwali. So, possibly weeks after Diwali we could have something. The food minister has also made a comment that he has got the report from the PMO. He is going to look at it and obviously that is a kind of a hint about what they will do. We can expect something by late November or early December.
Q: What do you think would be the domestic production this season? What's your view on international prices? We have seen raw sugar below 19 cents, how do you think that will move?
A: Expectation is that Brazil is going to produce more raw sugar next year. There would be a lot of pressure on the raw sugar prices. It may come down a little further. Indian production will be either stable or lower. We could present an import market if there is a shortage in Indian market.
Talking about Indian production, the right time to estimate would be sometime in December. In March we could have the final estimates. My guess is that we will do around 24 million tonnes at this point.