ICRA bullish on sugar prices in near term as supplies seen tight.

Prices of sugar are likely to remain firm in the near term due to tight supplies. Output of sugar in 2016-17 (Oct-Sep) fell to a seven-year low of 20.2 mln tn due to continued dry spell in Tamil Nadu, Karnataka and Maharashtra are major sugar-producing states in the country. ICRA has estimated the closing stocks for the season to be at 4.5-5.0 mln tn. The carryover stocks would be sufficient to meet the requirement for only around two months of consumption. This is still lower than the normative stock level of three months (around 6 mln tn). The country ideally needs three months’ worth of carryover stock to meet demand until cane crushing gathers pace by December.