Sugar prospects in 2020: Will prices rise or fall in coming months?

The sugar prices averaged between Rs.34 per kg to Rs.35 per kg in the last 5 months August to December 2019 supported by minimum support prices (MSP) announcement and lower sugar estimates for the season 2019-20.

The sugar prices are expected to remain stable even as production is expected to fall in the coming months, a report said. The rates may remain in the range of Rs 34 per kg to Rs 35 per kg as output is likely to decline by 21.5 per cent during sugar season 2019-20, CARE Ratings said in a report. The prices will also depend on the pace of exports during the year, it added. For the complete sugar season the sugar output is expected to be at 26 million tonnes, considering the diversion of heavy molasses or sugarcane juice to ethanol on-year decline of 21.5%, the ISMA estimates show. The sugar prices averaged between Rs.34 per kg to Rs.35 per kg in the last 5 months (August to December 2019) supported by minimum support prices (MSP) announcement and lower sugar estimates for the season 2019-20 despite the extension of the problem of high sugar inventories.

Meanwhile, the country’s sugar production has fallen sharply by 30.22 per cent to 7.79 million tonne in the first three months of the current marketing year ending September, but ex-mill prices have remained stable so far, helping mills clear cane payments to farmers on time, ISMA said on Thursday.

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“Since the centre has not increased the Fair and Remunerative Price (FRP) for 2019-20 as also the state governments like Uttar Pradesh, Uttarakhand and Punjab have not hiked the State Advised Price (SAP), ex-mill prices remain stable, mills are in a better position to be able to pay cane price to the farmers on time,” ISMA also said in the statement.