Insight Focus
Domestic sugar prices hit a 6-year high. Both raw sugar and refined sugar export margins are positive today. Will India need to import sugar?
Maharashtra Sugar Imports/Exports
Domestic sugar prices have hit another 6-year high at INR 38,750/tonne last week and continue trading at this price.
On paper, the raw sugar export margin remains positive today with mills still being able to earn 0.5c/lb over the domestic market. However, if the domestic price continues to rise to INR 40,000/tonne at today’s world market prices, exports become unviable with the margins hitting breakeven.
White sugar export margins today are also positive as mills would earn around USD 45/tonne over the domestic market.
2024/25 Indian sugar production will be below consumption levels. For the time being most local observers believe sotcks are sufficient to meet consumption in 2025. But if prices continue to rise, the government may come under increasing pressure to allow and/or incentivise imports.
Ethanol vs Sugar
Many mills/distilleries have a choice over which feedstocks they use to make sugar or ethanol based on the relative prices of ethanol paid by the oil marketing companies.
The Indian government has raised prices for C-molasses by 3% for the 2024/25 season to ensure that there is enough ethanol for the Ethanol Blending Program (EBP), as the 20% ethanol blending target is due this year.
Like the current season, the government had incentivised C-molasses production in the previous season to ensure that there was enough sugar supply for domestic consumption as food security was a priority for the government at the time.
The revenue generated by the mills based on the type of feedstock used can be seen in the chart below:
Proportion of Sugar to Ethanol:
Here are the current prices paid for ethanol by feedstock:
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