With sugar production expected to be down in the 2023-24 season, the central government has directed all sugar mills not to use sugarcane juice or syrup for making ethanol this year and has allowed the production of ethanol from B-heavy molasses as it is.
The 2023-24 sugar season started in October, while the ethanol supply year (ESY) started in November.
The direction came as negative news for the sugar companies, with their stocks trading lower on Thursday. Investors felt that ethanol realisations would get impacted as the major feedstock moved to produce more sugar.
In the 2022-23 ESY (December-October), sources said that until a few months ago, of the 4.94 billion litres of ethanol produced in the country, a quarter, estimated to be around 1.26 billion litres, came from sugarcane juice or syrup as feedstock, while 2.33 billion litres (around 47 per cent) came from B-heavy molasses, and the rest, around 1.3 billion litres, came from grain-based sources.
In the 2023-24 ESY, some reports said over 2 million tonnes (mt) of sugar could be ploughed back into the total supplies by this order of the government to stop sugar companies from producing ethanol from cane juice and syrup.
ome industry players said a big reason why the government has not come out with the pricing for the sugarcane-based ethanol this year, even though the season started last month, could be that there is little clarity about the impact on sugar supplies due to the ethanol programme.
But now, with sugarcane crushing entering its third month, the picture on the production front does not look extremely promising. This is why, after stopping imports and expanding the monthly release quota, the government has decided to desist mills from producing ethanol through a process that consumes most actual sugar.
