Mumbai: Sugar prices in Maharashtra may spike to over-two-year highs in the first half of next year as output in the year ending September 2009 may fall over 37%, a senior industry official said.
The prices of superior quality sugar may rise up to Rs1,700 per 100 kg ex-mill without taxes by June 2009, Prakash Naiknavare, managing director, Maharashtra State Co-Operative Sugar Factories Federation Ltd, said in an interview on 4 August. This means the retail price may cross Rs2,000, he said.
The current ex-mill price of superior M-30 sugar in the state is about Rs1,530 per 100 kg.
“No rainfall from last week of June to end July resulted in water levels going down. Standing crops were deprived of water which may result into lower output at about 5.7 million tonnes in year ending September 2009,” Naiknavare said.
This is lower than earlier estimtes of 6.8 million tonnes.
The state, the country’s largest producer, is estimated to produce 9.1 million tonnes of sugar in the year ending September 2008 against the country’s output of about 27 million tonnes.
A shopkeeper removes sugar from a sack in Mumbai. Sugar output will also be impacted by lower cane available for crushing and lower sugar recovery in the new season. Photo: Sima Dubey/Bloomberg News
Sugar output will also be impacted by lower cane available for crushing and lower sugar recovery in the new season.
Cane for crushing is likely to go down to 50 million tonnes as part of the crop was diverted for use as fodder.
The average sugar recovery is also seen down at 11.4% in the new season compared to about 11.9% due to poor rains in late June and July.
The state may start crushing from November this year instead of October to maximise recovery, Naiknavare said. Sugar recovery rises during winters when temperatures are low.
Overall, the state may contribute a little over 26% to the country’s likely output of 21.7 million tonnes in the year ending September 2009, Naiknavare said.
“Sugar industry is definitely into the golden era starting Oct 2009 in terms of better price for sugar, power and ethanol.”
In the season ending September 2010, the output of the state is likely to further drop to 4.6 million tonnes, according to early estimates by Naiknavare.
“The sowing this year has been much lower hence overall cane available for crushing next year may not be more than 40 million tonnes,” Naiknavare said.
There has been no sowing of the 18-month cane variety which is sown between April to June and contributes to about 10% of total cane produced, he said.
Sowing of the 14-15 month crop, which is currently on, is also weak, indicating an overall fall in cane area in the state to about 650,000 hectare from 800,000 in 2008-09.