The government has extended the nationwide lockdown till June 30 with a phased plan to unlock India. Malls, hotels, restaurants and places of worship can open on June 8 except in areas with the most number of coronavirus cases.
Higher than expected sugar output in Uttar Pradesh could result in a problem of plenty for sugar mills
The country is the world's biggest sugar producer and lower output could support global prices.
Sugar sales in March and April declined by 10 lakh tonne because of the imposition of nationwide lockdown to control the coronavirus disease, the Indian Sugar Mills Association (ISMA) said.
The crash in oil prices has taken down sugar along with it. But there’s more that signals a tough time ahead for sugar mills.
"Additional quantity of 745 MTRV (metric tonne raw value) of raw cane sugar, for export to the USA, under TRQ, up to September 30, 2020 has been notified," Directorate General of Foreign Trade (DGFT) said in a public notice.
Of the 3.75 million tonnes, mills have already shipped out 2.86 million tonnes of the sweetener, Praful Vithalani, president of the All India Sugar Trade Association said.
The association pointed out that nationwide lockdown had initially disrupted some movement of sugar due to lack of availability of trucks, but sugar dispatches have picked up in the last 4-5 days after the government intervention to smoothen the supply chain.
As per the notification, 545 mills have been allocated 18 lakh tonnes of sugar for sale in the next month. The quota was same in the year-ago period.
Lower exports from the world's biggest sugar producer could support global prices that have fallen nearly a third from a February 12 peak and help rivals such as Brazil to increase exports.
The outlook for sugar mills was looking rosy at the start of 2020. A few months into the year, it's soured and not just because of the coronavirus pandemic
The decline in sugar production is due to fall in the production of sugarcane mainly in the major sugar-producing states of Maharashtra and Karnataka, due to drought in some parts and heavy rains and floods in some other parts of these states, he said.
The previous deadline for shipment of balance sugar quota of 2018-19 expired on February 15.
Mills are likely to produce 26.5 million tonnes of sugar in 2019/20, 1.92% lower than the November forecast of 26 million tonnes, ISMA said, thanks to higher crop yields and the robust sugar recovery from the cane crop.
Indian Sugar Mills Association (ISMA) had in November last year pegged sugar production at 26 million tonnes for the 2019-20 marketing year (October to September) considering fall in sugarcane crop in key growing states, compared with 33.16 million tonnes during the 2018-19 marketing year.
Depressed sugar prices due to surplus sugar production in two consecutive sugar seasons -- 2017-18 and 2018-19 -- adversely affected the liquidity of sugar mills resulting in accumulation of cane price arrears of farmers.
For the current year, the government has allowed export of 6 million tonnes of sugar under the quota to help deal with the surplus sugar.
A sharp decline in output in the 2019-20 sugar season has helped sugar prices firm up globally
"We are due to meet on Feb. 25 when we will revisit the estimate and if there is significant change it will come out in the last week of February," Vivek Pittie, President of ISMA told an industry conference in Dubai.