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Supply Chain

India's Sugar Sales To Race To Record High As Summer Demand Peaks

After two years of lull, India's sugar consumption is set to hit record highs in the current summer season as demand from bulk consumers such as cold drink and ice cream-makers rises after the lifting of COVID-19 restrictions, industry officials said.

India's sugar consumption in the 2021/22 marketing year that ends on 30 September is set to rise by nearly 3% from a year ago to an all-time high of 27.2 million tonnes, according to the Indian Sugar Mills Association (ISMA).

Exports are also expected to reach record levels, with Indian mills having already signed contracts to ship 7.2 million tonnes of sugar overseas in the 2021/22 marketing year, the ISMA estimates.

That could reduce stocks in the world's second-biggest producer of the sweetener, lifting local prices. Higher domestic prices may in turn prompt mills to export less sugar and spur government restrictions on further shipments, supporting global prices.

"As summer season has started, demand has been rising from beverage makers. Unlike last year, there is no fear of COVID," said Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories Ltd.

"The government has also lifted restrictions on weddings and other events," he said.

Read More: Russia Faces Rising Sugar Prices, Shortages As Traders Divert Shipments

Rising Demand For Sugar

Consumption of cold drinks and ice cream, and as a result demand for sugar, rises in India during the summer months that run roughly from March to June.

Demand also gets a boost in summer from the wedding season, but in the past two years authorities had restricted the number of guests at weddings and other functions to curb the spread of coronavirus.

Rising exports and strong local demand would help bring down stockpiles that had been weighing on local prices, said B. B. Thombare, managing director of Natural Sugar & Allied Industries, a sugar mill based in western state of Maharashtra.

The country could start the new marketing year with opening stock of around 6 million tonnes, the lowest in five years, unless the government restricts exports to contain local prices, said a Mumbai-based dealer with a global trading firm.

India plans to restrict sugar exports for the first time in six years to prevent a surge in domestic prices and could cap this season's exports at 8 million tonnes - still a record level - government and industry sources told Reuters last month.

Local sugar prices have been rising in the past two weeks and could climb further as demand is set to jump from bulk buyers, said Ashok Jain, president of the Bombay Sugar Merchants Association.

News by Reuters, edited by ESM – your source for the latest supply chain news. Click subscribe to sign up to ESM: European Supermarket Magazine.

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