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    We are near the 10-year peak in sugar cycle: M Manickam, Sakthi Sugars

    Synopsis

    “We have 10 mn tonne stock and export of 2 mn tonnes is not going to create shortage.”

    M Manickam, Sakthi Sugars1200
    Largest sugar producer, India, is shifting into ethanol in a big way due to government support and would not be in a position to export much from next year. That will create a gap in the market and lead to a rally, M Manickam, CMD, Sakthi Sugars, tells ET Now.

    Edited excerpts:

    What do you think is the real reason for a spike in sugar stocks, ethanol and this temporary supply-demand imbalance?

    There are multiple factors. There is Brazil which is not producing enough. India has become the largest producer of sugar even at 32 million tonnes while Brazil used to produce something like 36 million. So, Brazil production going down by about 5 to 6 million tonnes means the world market is going to be more balanced than being surplus.

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    The second issue is the largest producer, India, is shifting into ethanol in a big way due to the government support for the ethanol programme. We also see that India would not be in a position to export too much from next year. You would see a lot of sugar being converted to ethanol and the support from the government for stocks and also the support for exports. We are seeing deficit or balance come into the market. That is basically giving us rally and it is a 10-year cycle. We are pretty much near the 10-year peak. You would also see the cycle coming back.

    Would higher ethanol blending be a good solution to resolve some of the financial issues that the sector is facing?

    Higher blending of ethanol could reduce about 2 million tonnes of sugar in the short term and maybe more than that in the longer term. You would find Indian production coming in balance with the consumption. Higher blending of ethanol is a good programme and the government has given a comprehensive programme this time that they are giving incentive for ethanol, they are also giving incentive for export so which I think will address most of the issues the industry is facing.

    What about sugar exports, could that be the joker in the pack?

    I do not think it will really backfire because we have almost 10 million tonne stock at this point of time and export of 2 million tonnes is not really going to create shortage. I do not think the government should fear higher sugar prices coming because of this policy.



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    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
    The Economic Times

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