- 07 Nov 2022
- ICICIdirect Research
GOVERNMENT ALLOWS 6 MILLION TONNES OF SUGAR EXPORT
News:
The government has allowed sugar export of 6 million tonnes (MT) for 2022-23 sugar season in the first trench. It has decided sugar export quota in proportion to average sugar production of last three years & each sugar mill got 18.4% of its 3-year average production as export quota
View:
Sugar production in India is expected to be 36 MT after diverting 4.5 MT of equivalent sugar for ethanol. With the consumption of ~27.5 MT in the season, the industry is required to export 8-9 MT of surplus sugar from October 2022 to September 2023 in order to keep the sugar inventory at 5.5 MT levels. This would result in second trench of 2-3 Mt of exports would be allowed by January-February 2023. We believe high sugar production would keep domestic sugar prices in small range of between Rs34-Rs36/kg. Currently, global refined white sugar prices are prevailing at Rs 38-Rs 40 / kg (in INR terms) & raw sugar prices are prevailing at Rs34-35 / kg. We believe India would be easily able to export 8-9 MT of sugar in the season given ~3 MT already contracted. However, we believe sugar mills with refined white sugar capacity would benefits by exporting white sugar as it would improve their blended sugar realisation
Impact:
Positive