Experts see sugar production at 15 mt next year

Sugar is one sector which a lot of investors are getting more enthused about after a long time. Now the question that arises is, where is the sector headed given the kind of shortage in market right now where demand is far higher than supply at this point in time.

This season sugar production combined with last year's inventory will barely meet domestic demand. Reports peg sugar production at 14.2 million tonne in current season as against 26.4 million tonne. The estimates are 45% lower than 26.4 million tonne last year and lowest since 12.7 million tonne in 2004-05.

The recovery from cane has been hit this year due to adverse weather conditions in growing areas. The Indian Sugar Mills Association (ISMA) expected production to be around 16 million tonne last month. Food Minister Sharad Pawar estimated annual production around 16.5 million tonne in March. It is likely to reduce, due to lower availability of sugarcane and due to diversion to other competing sectors.

So, where do experts peg sugar production for next year at?

M Manickam, Managing Director, Sakthi Sugars, said output for next year is seen at 15-16 million tonne. According to him, Rs 25-26 per kg could soon be the baseline for sugar.

Investment Advisor SP Tulsian said production is estimated at 19-20 million tonne. “It is not likely to exceed more than 15 million tonne this season. Prices are likely to remain ex-mill at Rs 24 which could be the case for Maharashtra and the southern sugar mills, while it could be about Rs 25 for the Uttar Pradesh mills.”

source: moneycontrol