Sugar prices down due to improved production: Oudh Sugars

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Sugar prices down due to improved production: Oudh Sugars

In an interview with CNBC-TV18, CS Nopani, Managing Director of Oudh Sugars, spoke about his outlook on sugar prices.

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In an interview with CNBC-TV18, CS Nopani, Managing Director of Oudh Sugars , spoke about his outlook on sugar prices.

Here is a verbatim transcript of an exclusive interview with CS Nopani on CNBC-TV18. Also watch the accompanying video.

Q: Where do you see the sugar prices stabilise from here? How does the production situation look for you in terms of kind of realisations you are expecting in this quarter on the back of the way sugar prices have moved?

A: Sugar prices have come down. They had gone up at inordinately high level. The shortfall which was earlier envisaged in India is actually not there because production this year is marginally better than last year. We are looking to close this season at around 160,000 tonne of production. Simultaneously we are looking at very strong production coming in from Brazil.

The international markets were basically high in anticipation of large scale imports by India, which is actually not happening. What has been imported or contracted is already available. So India doesn't need to import any more sugar to meet its own needs. Hence, the international markets are correcting and they have come down.

Q: Do you think this pricing downtick that we are seeing is a temporary phenomenon? Once the demand picks up, will we see it kicking in by April-May?

A: I do expect that prices will further improve because presently the prices which are so low in India are predominantly due to a number of measures which have been taken by the central government especially with stock holding limits and with the weekly releases which they are doing.

This has curtailed demand and bulk consumers are not able to buy their full quantity of sugar but they are just going on hand to mouth basis.

Q: What are your current average realizations? What do you hope to close the year with?

A: Presently, realisations especially north India has come down to around Rs 3,200 which is a losing proposition for most of the sugar mills looking at the kind of sugarcane prices that have been paid this year. If you were to look at sugarcane pricing, which has been paid then costing would come to not less than Rs 3,600-3,700 a quintal also looking that we are supply 20% as levy sugar.

Q: What is your estimate of production in SY10, where it stands?

A: We are looking at this year at 160,000 tonne as far as India is concerned. The factories are still crushing operations for the large part of the county.

Q: Would you look at any more raw sugar imports? It becomes a little more attractive.

A: At this moment I do not think anybody is looking at more raw sugar imports because we do have our availability of sugar here in the country. In the future it all depends on where the international prices go and settle down at. At that time one can take a call.