The most recent data from the USDA’s first biannual report on the supply and demand of sugar in India bring important information about the increase in the volume of supply of the commodity at the end of the next international 2020/21 season that begins next October. According to USDA, production should grow 16.63%, or 4.80 million tons, with supply going from 28.90 to 33.70 million tons.
Still in May, USDA already pointed out that favorable storage conditions for the country’s reservoirs were the main driver for supply expansion, which, in theory, would encourage more local producers to maintain and expand cane fields. At the end of the third week of June, the Indian Sugar Mills Association (ISMA) indicated that it also expects an increase in the sugar supply in the country for the same reason, favorable conditions for cane fields due to the comfortable level of storage in reservoirs. The ISMA’s figures point to a 12.13% rise, or growth of 3.30 million tons, with the 2019/20 crop supply going from 27.2 to 30.5 million tons in the 2020/21 season. ISMA also detailed that the country’s sugarcane area is expected to grow by 8%, data that USDA did not include in its May report.
ISMA also pointed out exports between 6 and 7 million tons, against the level of 5.2 million tons of the current 2019/21 crop. USDA points to exports of 5 million tons for next season, stable in relation to the current crop. ISMA expects stockpiles to drop from 14.5 to 11.5 million tons, down 20.69%. USDA indicates that the country’s beginning stocks must decline 9%, from 17.61 to 16.01 million tons, and final stocks are expected to advance by 8.77%, changing from 16.01 to 17.49 million tons. Coincidence or not, the India’s National Federation of Cooperative Sugar Factories (NFCSF) also indicated an increase in the country’s production, pointing to a growth of 14%, or 4 million tons, from 27.2 to 31.2 million tons. Thus, it is clear that USDA, ISMA and NFCSF are seeing a supply scenario of 30 to 31 million tons for the 2020/21 season in India, which begins now in October.
Turning to the USDA’s report, and looking more closely at the most recent data for May 2020, production is indicated at 33.70 million tons in the 2020/21 season, which represents an increase of 16.63%, or 4.80 million tons over the volume of the 2019/20 international season, which hit 28.90 million tons. On the side of domestic demand, there is an increase of 5.56%, or 1.5 million tons, between the 2019/20 and 2020/21 seasons, with internal consumption rising from 27.00 to 28.50 million tons.
As a result, the balance of supply and demand tends to show a surplus of 5.20 million tons, up 173.95% (increase of 3.30 million tons) from the surplus of 1.90 million tons of the 2019/20 season.
In the meantime, the final stocks for the 2020/21 season are likely to reach 17.41 million tons, with an advance of 1.40 million tons between the 2019/20 and 2020/21 crops, indicating an increase of 8.77% between the two seasons. This growth in final stocks must lead the stock/consumption ratio to 61.12%, up 1.81% from the level of the previous crop, which was 59.31%. The stock/consumption ratio is on the rise due to the 8.77% increase in stocks, although it received a slightly negative impact by the 5.56% increase in demand. With this, the index of the capacity to meet the demand from the final stocks of the crop gets closer to the record level of the last nine crops, which was 63.94% in the 2018/19 season.
The beginning stocks of the 2020/21 season must hit 16.01 million tons, pointing to a 9.08% decline from the volume of 17.61 million tons of the previous crop, which means a decrease of 1.60 million tons. Imports for the 2020/21 season must fall by 300 thousand tons, or 20.00%, from 1.50 to 1.20 million tons. In turn, exports must remain stable at 5.00 million tons between the 2019/20 and 2020/21 seasons.