According to ISMA, sugar production in Maharashtra, Karnataka, Gujarat, and Tamil Nadu remained lower till February of the ongoing marketing year. However, sugar output in Uttar Pradesh, the country's second largest producer of the sweetener, was higher at 7.81 MT as against 7 MT in the period under review.

The production in Maharashtra -- the country's largest producer of sugar -- was down at 9.09 MT till February of this marketing year, compared with 9.51 MT in the year-ago period. Similarly, the production in Karnataka -- the country's third largest producer -- was down at 4.7 MT from 5.12 MT in the period.

Sugar output reached 7,70,000 tonne in Gujarat and 5,80,000 tonne in Tamil Nadu so far this marketing year. Around 466 factories were operating till February of the current marketing year as against 447 in the year-ago period. "In the current season, rate of closure of mills in Maharashtra and Karnataka is slower than last year, indicating that tail of the season could be longer this year in these states," ISMA said.

So far, a total of 49 factories have closed across these two states this year as against 74 factories closed in the year-ago period, it said. Overall, 65 factories have closed their crushing operations across the country as against 86 in the year-ago period.

Global production forecast is revised down to 179.749 mln tonnes in 2023-24

The International Sugar Organization (ISO) increased its forecast for an anticipated global sugar deficit in the current 2023-24 season. In a recently released report on the worldwide sugar market, the ISO’s second revision of 2023-24 balance reveals a global deficit of 0.689 million (mln) tonnes, increase from 0.335 mln tonnes in November last. Global production forecast is revised down to 179.749 mln tonnes in 2023-24, from 179.887 mln tonnes previously. World consumption is now projected at 180.438 mln tonnes in 2023-24. The 2.581 mln tonne increase over last season represents a 1.45% rise, up from 1.02% in 2022/23. According to the ISO, changes in trade dynamics are key market considerations. The record trade volume of over 67 mln tonnes forecast in 2023-24 is partly driven by expanding re-export operations through port-based refineries, which is projected to rise by 3.296 mln tonnes.

Raw Sugar Surges As Bounce From Five Week Low Extends

Global Sugar futures pulled back in last week of February 2024 and extended the losses at the start of March 2024, testing a two month low of around $20 per pound. Global Sugar prices slumped over last few days amid estimates of elevated Brazilian output. Unica has reported that Brazil's Center-South sugar output jumped by 148.6% y/y in the first half of January to 48,000 MT and that sugar output in the 2023/24 crop year through mid-January also soared 25.5% y/y to 42.099 MMT. Meanwhile, more sugarcane is being crushed for sugar than ethanol, noted Unica. Raw Sugar futures hit 24.60 cents per pound in last week of January 2024, hitting highest levels in nearly seven weeks but flipped back thereafter and fell around 2% yesterday. The counter lost another 0.34% today to trade at 23.48 cents per pound. Global Sugar futures had dipped near 20 cents per pound mark at the fag-end of the last year- testing lowest level in nearly ten months.

FRP of sugarcane raised 8% to Rs 340 a quintal for the 2024-25 season

The government announced a hike in the fair and remunerative price (FRP) of sugarcane to Rs 340 a quintal from Rs 315 for the 2024-25 season. This is around 8% higher than the rate for the 2023-24 sugar season. The revised FRP will be applicable with effect from October 1, 2024. With this approval, sugar mills will pay FRP at recovery of 10.25%. With each increase of recovery by 0.1%, farmers will get additional price of Rs 3.32 while the same amount will be deducted on reduction of recovery by 0.1%, the Centre said in a statement.

Outlook:

Local Sugar demand is likely to be well supported in summer season amid continued pickup in economic growth. Meanwhile, there will be no El Nino conditions during the monsoon season, the India Meteorological Department (IMD) noted in a latest update. This can lead to a good monsoon in 2024 which can lead to higher sugarcane crop.