Insight Focus
The government has announced it will allow for 1m tonnes of exports in the 2024/25 season. Domestic sugar prices are trading between INR 34,400-35,400/tonne. Export margins are at breakeven for both raw sugar and refined sugar.
Introduction
India, the world’s second-largest producer of sugar, aims to blend 20% ethanol in gasoline by 2025.
This ethanol will be made from sugar cane and various grain feedstocks, which means many Indian mills now have a choice about how they use the sucrose in the cane. We will show the choices they are making in this report.
Maharashtra Sugar Imports/Exports
Domestic sugar prices have been trading between INR 34,400 – 35,400/tonnes this month. The government has announced that it will allow mills to export 1m tonnes of sugar in the 2024/25 season. The raw sugar export margin is at breakeven. The returns on exporting raw sugar are minimal with the world market currently trading below 19c/lb.
White sugar export margins today are also at breakeven, meaning mills will not profit hugely from exporting their sugar.
Furthermore, cane crushing is in full swing across the country, however cane crushing was delayed in Maharashtra, one of the largest sugar producing regions, due to the local assembly elections. Sucrose yields have been poor so far in Maharashtra but especially in Karnataka.
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 revenue generated by the mills based on the type of feedstock used can be seen in the chart below:
Here are the current prices paid for ethanol by feedstock:
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