Saccharine sunrise

After two consecutive years of a lull in production, this year is going to be good for all — consumers, manufacturers and farmers. Sugar production for 2005-06 is estimated at 18.3 million tonnes — a jump of 33 per cent over the previous year.

Sufficient irrigation, and a good monsoon prediction should lead to higher cane yields, industry sources say.

Another good news: sugar imports are expected to come down from 20 lakh tonnes to 10 lakh tonnes in 2006 following the bumper production.

On the other hand, cane cultivation area is estimated to have risen by nearly 11 per cent to 4.2 million hectares, coupled with good monsoon and irrigation facilities — another indicator that 5-million strong farmers are taking it seriously.

But sugar is yet to make an impact on the commodity exchanges.

‘‘Sugar is not enthusiastically traded, partly due to its certainty in supply and government controls,” says Prakash Naiknavare, managing director of Maharashtra State Co-operative Sugar Factories Federation.

The success of any commodity in the exchange lies in it being uncertain and unpredictable in nature.

But even Naiknavare is optimistic about a change in the trading pattern this year.

Reason: the government’s phased decontrol in the form of removal of market release mechanism.

TRADE WINDS

Price behaviour: S30 variety now quotes at Rs 1,635 per quintal (ex-mill without excise), down from Rs 2,400 three months ago.

Total production: 18.3 million tonnes in 2006 as against 13.7 million tonnes last year

Total supply: 25.39 million tonnes in 2006 (including 60.5 lakh tonne carryover stock, 10 lakh tonnes imports and domestic production)

The industry: Fragmented with over 436 sugar factories. Of this, 259 factories belong to the co-operative sector, operating largely in Maharashtra (128), UP (31), Gujarat (17), Punjab (14) and Karnataka (18)