Sugar prices could see 10% rise by September: Crisil

Government’s decision to give a subsidy of Rs 3.33 per kg on exports of 4 million tonne (mt) of raw sugar over the next two years will reverse the trend of falling domestic sugar prices and provide some respite to the manufacturers, says a report by CRISIL Research.

In a bid to boost overseas sales of raw sugar and help the cash-starved industry to pay arrears to sugarcane farmers, the CCEA approved a subsidy of Rs 3,333 per tonne for exports of raw sugar. This subsidy will be valid for February-March and would be reviewed in April, Food Minister KV Thomas said.

The research firm expects ex-mill (Maharashtra) sugar prices to increase from Rs 26 or so currently to Rs 29 per kg by the end of the season – a jump of over 10 percent.

“At the all-India level, average sugarcane cost as a percentage of sugar prices is expected to reach nearly 100% in the current season from 86% in the last. Despite significant inventory levels at the beginning of the 2013-14 season, the players were unable to export since the export realisations were Rs 2.00-2.50 per kg lower than domestic prices due to weak international prices,” it adds.