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Sugar

Sugarcane is cultivated in India since ancient times. It is believed to be originated from South and South-East Asia. India is the second largest producer of cane sugar next to Brazil. Sugarcane is scientifically known as Saccharam officinarum.Sugarcane is a tropical plant, reported to have originated either from India or the South Pacific. The word 'sugar' is known to have derived from the Sanskrit word sharkara.
 
Economically Important Products: Sugar used for direct consumption and in various foods and confectionary. A good quality cane gives about 10-10.5% sugar while a poor quality cane may give only 7%.
 
 
Climate and Cultivation
 
Sugarcane is grown right from Punjab and Haryana in the North and Karnataka and Tamil Nadu in the South. A long and warm growing season with adequate rainfall or irrigation, long hours of bright sunshine and higher relative humidity permits rapid growth to build up adequate yield. A ripening season of around 2-3 months duration having warm days, clear skies, cool nights and relatively dry weather without rainfall and higher difference in day and night temperatures are required for formation of sugar.
 
Sugarcane crop takes 12-15 months for maturing. Once it is cut after maturing, fresh tillers grow from the stubbles as a second crop called ratoon crop. Sugarcane in South India takes longer period up to 18 months, hence is called Adsali where as in North India it takes about a year, hence called Eksali. Planting season varies across regions and states. Majority of plantings take place between Sep to Feb. Harvesting starts in Oct in North while in Dec in South and extends until May.
 
 
 
 
 
 
 
Global Scenario
 
 
World sugar production from cane has been posting a persistent rising trend during the past five years and is expected to reach about 140 million tonnes in 2013-14. Consumption has also increased rather steeply during the recent years and may touch 167.6 million tonnes in 2013-14 as per the latest estimates of the USDA. On the other hand trade remained volatile with an overall moderation in the recent years.
 
 
Table 1: Trends in world sugar demand and supply

 
Production
Consumption
Trade
End Stocks
2009-10
120.01
154.08
34.07
28.76
2010-11
129.98
154.79
24.81
29.83
2011-12
133.40
158.15
24.74
35.99
2012-13
139.71
163.67
23.96
43.16
2013-14
140.23
167.64
27.41
43.38

Source: USDA     
 
 
Among the major producing countries, Brazil occupies the first place with about 41% of world’s sugar production followed by India with 27%, China 14% and Thailand 11% as per the latest estimates available. The largest cane sugar consumer is India with about 32% followed by EU with 22%, China with 19%, Brazil with 14% and United States with 13% as per the estimates for 2012-13.
 
 
 
 
The largest producer, Brazil is expectantly the largest exporter followed by Thailand and Australia. Exports from India have been highly volatile and reached the third position during 2010-11 and 2011-12 but slipped back to 4th position in 2012-13. The apparent volatile trends could be on account of changes in the India’s export import policies particularly with regard to white or processed sugar.
 
 
Table 2: Major sugar producers, consumers and exporters as in 2012-13

Producers
Consumers
Exporters
Importers
Brazil
India
Brazil
Indonesia
India
China
Thailand
U.S.
China
Brazil
Australia
China
Thailand
U.S.
India
U.A.E
Mexico
Russia
Guatemala
Algeria

Source: USDA
 
 
Domestic Scenario
 
Sugarcane production in India has a cycle of 2-3 years as the crop once planted usually stays for two years on the field giving two harvests. The cane area and thereby production is primarily driven by the prices. Nevertheless, the production has witnessed a consistent upward movement and reached over 28 million tonnes in 2006-07 though moderated in the subsequent two years. Production for the year 2013-14 is estimated at 25.5 million tons.
 
 
           
 
The demand and supply scenario suggests that there are sufficient surplus in sugar production to meet the demand requirement and for exports. Hence, the prices of sugar are expected be moderate at current levels.
 
Table 3: Domestic demand and supply of sugar (lakh tons)

 
Production
Imports
Exports
Consumption
Stocks
2009-10
188
42
2
212
36
2010-11
244
0
26
208
51
2011-12
263
0
40
214
58
2012-13
239
0
35
215
61
2013-14
255
0
35
218
50

Source: Dept of Agriculture & Cooperation, CACP, Ministry of Agriculture, GoI
 
 
State-wise production
 
State wise production indicates that more than 80% of sugar comes from only four states viz., Uttar Pradesh, Maharashtra, Karnataka and Tamil Nadu. Uttar Pradesh has traditionally been cultivating and contributing for 35-40% of total sugar produced in the country. Maharashtra has been the third largest producer but its production was doubled since 2006-07 onwards and consequently its share has gone up to nearly 25% in the recent years. The steep jump in the overall sugar production in 2006-07 onwards could primarily be attributed to increase in production levels of Maharashtra.
 
 
 
 
 
Major Markets
 
Spot markets: Ahmedabad, Bareilly, Hyderabad, Muzaffarnagar, Kolhapur, Mumbai and Solapur
 
Futures trading:
International: NYSE Liffe, NYBOT, ICE
Domestic:NCDEX
 
External Trade
 
Import and export of sugar has been highly restricted and strictly controlled under the sugar control policy. Exports are allowed only when there is excess production. As a result, external have been highly erratic and negligible, barring a few years and have not shown any specific pattern. 
 
Major export destinations: Indonesia, Bangladesh and Sri Lanka.
 
Major import sources: NA
 
 
 
Factors Influencing Prices:
 
  • Carryover stocks: Inventory and stocks from the previous year’s production after meeting the demand.
  • Expected demand: Based on the average level of consumption and exports during the past few years.
  • Crop acreage: Extent of area sown under the crop
  • Production: Estimated output based on the acreage and weather conditions and pest infestation etc.,
  • Exports: Regular monitoring and estimation of consumption requirements in the destinations would help in predicting the price movements.
  • Government policies: Any change in government policy relating to the crops such as statutory minimum price and export-import policies need to be tracked.
 

 

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