Indian Share Market Tips|commodity Tips|Sugar market glut, farmers' outstanding to lead to a bitter season in UP
UP's mills, dominated by the private sector's 94 units, have already expressed their inability to participate in the next crushing season.
Domestic sugar market glut, farmers’ outstanding of about Rs 170 billion along with bumper sugarcane crop for the next crushing season of 2018-19 are all pointing towards an impending crisis-ridden sugar cycle.
In this backdrop, the Yogi Adityanath government has directed mills to start their crushing operations early (from October 15). For this, units in western UP have been asked to take the lead.
Of the total arrears of Rs 170 billion, UP mills, totaling 119, owe the highest amount of about Rs 112 billion, followed by Maharashtra at Rs 11 billion.
UP’s mills, dominated by the private sector’s 94 units, have already expressed their inability to participate in the next crushing season. This is due to the high arrears and paucity of working capital to pay for the routine maintenance and repair of their units before the next season.
Owing to the higher pan-India estimated cane acreage of 5.44 million hectares (MH) in 2018-19, 8 percent higher compared to the previous season –sugar production has been pegged at almost 35.5 million tonnes (mt) by the Indian Sugar Mills Association (ISMA).
Higher production estimates coupled with steep current inventory with mills – especially in UP where total unsold stock during the 2017-18 season is estimated at 5 mt or 40 per cent of the total output of 12 it – would also lead to storage problems with the units, not only for sugar but for other byproducts, mainly molasses.
UP cane commissioner Sanjay Bhoosreddy has directed western UP mills to start from October 15 to November 5, while mills in central UP have to commence operations between October 25 and November 10, followed by eastern UP mills during 10-25 November.
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