Estimates Indicate Stable Sugar Production

Estimates for the new sugar season in India, starting October 2024, suggest a total production of 34.5 million tonnes. Experts predict that 4 million tonnes will be diverted to ethanol production. Rahil Sheikh, MD of Mir Commodities, emphasized that timely and fair payments to farmers have encouraged them to expand their sugarcane cultivation area and improve crop care. This expansion is expected to boost sugarcane area to 6 million hectares, particularly in Maharashtra and Karnataka.

Sugarcane Area Expansion and Ethanol Blending Targets

The Union Agriculture Ministry reported that sugarcane has been planted in 5.768 million hectares so far, up from 5.686 million hectares last year, showing a 1.5% increase. Sowing continues, and cultivation is expected to reach 6 million hectares by month-end. Sheikh anticipates a good harvest for the 2025-26 season, potentially setting records and enabling India to achieve a 20% ethanol blending target, alongside some export potential. Without significant sugarcane contributions, meeting the 20% ethanol blending target will be challenging. However, with current progress, India should meet domestic market and ethanol blending needs, with a surplus for export by 2025-26.

Government Initiatives and Alternative Ethanol Sources

The government is optimistic about achieving 20% ethanol blending by 2025. According to the Petroleum Planning and Analysis Cell's monthly report, ethanol blending with petrol was 15.4% in May 2024, with a cumulative 12.6% blending from November 2023 to May 2024. To increase ethanol production, producers are also turning to grains like corn and rice. This shift has led to increased ethanol production phases, potentially slowing down ethanol production from sugar. However, government encouragement is boosting overall ethanol production.

In summary, India's sugar production is estimated at 34.5 million tonnes for the new season, with significant contributions to ethanol production. Market dynamics, including sugarcane area expansion and government initiatives, will continue to shape the industry. Therefore, traders and producers should prepare for potential market adjustments and opportunities in ethanol blending and sugar exports.