Sugar feels the heat as eateries cook less
With less than a week left in March, most mills are using only 50-60% of their monthly allocations, said Deepak Ballani, director general of the Sugar and Bioenergy Producers Association of India.
India’s sugar system does not work like a free market. Every month, the government sets a quota for each factory to sell in the domestic market. This is to prevent too much sugar from flooding the market, which could cause a drop in prices and harm factory revenues, thus delaying payments to sugarcane farmers.
Export is carried out in a similar way, but less frequently. When India produces more sugar than it can consume, the government announces an export quota. This helps clear excess inventory without destabilizing domestic prices.
The government allowed factories to sell 2.25 million tons of sugar in March under the monthly quota system. They had completely exhausted the 2.3 million ton offer from March last year.
Supply disruptions caused by conflict in West Asia have tightened LPG availability in the country, forcing the government to prioritize supplies for essential uses such as home coking and urea production.
Abhayraj Kohli, managing partner of Gourmet Brothers, said consumption in major food commodities – a key driver of demand for edible oil, flour and poultry – among hotels, restaurants and the country’s vast network of street food vendors, especially in the unbranded segment, has weakened in the last three weeks. Abhayraj Kohli, managing partner of Gourmet Brothers, said it is a period when sugar demand corrects, following the peak consumption season that starts on Diwali and continues through Christmas, New Year and wedding season. Restaurants like Grandmama’s Cafe, Pritam Da Dhaba and Torii.
Although global sugar prices have shown some recovery recently, exports have remained weak due to reduced demand from the Middle East and Central Asian markets, rising transportation costs, high insurance premiums, and supply chain disruptions due to the Iran war.
