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The following events pertaining to the sugar industry have taken place since our update in September
2010:
The UP Government has announced a raise of Rs 40 in the state advisory price for normal
variety of sugarcane, taking the price for the current crushing season 2010-11 to Rs
205/quintal. Last year the price was between Rs 160-170/quintal, but due to a shortage the
mills procured it at an average price of Rs 260/quintal for 2009-10. For the current year 2010-
11, sugarcane production is expected to be good and therefore the possibility of high prices is
low. Currently mills are paying state advisory price Rs 205/quintal.
Most mills started crushing in Maharashtra, UP and South in the last week of November. The
crushing was delayed from October due to the monsoon, which stayed longer than expected.
Expectations for SY11:
Sugar production for the country is expected to be around 25 mn tonnes. It was initially
pegged higher at 25-26 mn tonnes, but the projection has been lowered due to the delay in
the beginning of cane crushing. The expected production this year is 31% higher than last
year’s output of 19 mn tonnes.
Sugar cane cost are expected in current year Rs 205/quintal, as compare last year of Rs
260/quintal.
Sugar prices are expected to average Rs 30/kg, as compared to the current ex-factory price of
Rs 27/kg. This is marginally higher than last year’s average price of Rs 26-27/kg.
For SY11 we expect the entire distillery realistion to be Rs 27/liter on an average since
ethanol price has been provisionally Government fixed at Rs 27/liter and we expect alcohol to
also be sold at Rs 27/liter due to a shortage. Last year there was no sale of ethanol therefore
the entire alcohol was sold at around Rs 15/liter.
We expect higher outputs in all the segments- sugar, distillery and cogeneration which, along
with an increase in realizations and improvement in margins, leads to the likelihood that the
current year will be the best year for the industry since the beginning of this century.
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