Sugar exports likely to make up for shortfall in domestic demand, says Crisil report

Sugar offtake is likely to remain flat in the current sugar season (October 2019-September 2020) despite the COVID-19 disruptions as buoyant exports are expected to make up for the shortfall in domestic consumption, according to a report.

Industrial demand for sugar, which accounts for 60 per cent of the total domestic consumption, is expected to fall 8-9 per cent in this sugar season (SS) due to hotels, restaurants and cafes remaining shut and people avoiding crowded places, Crisil Research said in its report.

Household consumption, which accounts for the remaining 40 per cent, however, is expected to slip just 2-3 per cent as prolonged confinement at home has seen a surge in appetite for biscuits and bakery products, it added.  Also, consumers are likely to prefer packaged sweet products, such as chocolates and cookies over loose sweets in the upcoming festive season for fear of contamination.

However, the shortfall in overall domestic demand will be more than made up by exports, which are expected to spurt more than 30 per cent to 5 million tonnes in SS 2020, Crisil said. This is mainly because of lower production in Thailand, which has turned its key importers Indonesia, Kenya, Bangladesh, Afghanistan and Iran towards India, it added.

Sugar production is estimated to be at 305 lakh tonnes during the sugar year ending 2021, and 272 lakh tonnes in SS 2020 ending September.