Sugar Cycles: 7-8 years of losses followed by 2-3 years of super gains!

Buffer stock of 4M tons was built in 2019. Now that we know the template of sugar use as Modi govt sees (priority order):

1. Have atleast 3 months of buffer stock
2. Ensure sugar is available for next sugar year (India’s consumption isn’t going beyond 29-30M in next few years)
3. Exports or ethanol blending.

Last time (2021-22 ?) sugar sector was bullish with a combination of factors:

1. Ethanol blending was at (till then) highest, mills could practically choose which ethanol (juice, B-Heavy, C-Heavy) to sell based on profitability. Immediate cash-flow within 15 days was a given.
2. Cane FRP/SAP was by and large constant from previous year(s)
3. Optimum sugar stocks, sugar price rose ₹2-3/kg, inspite of sugar MSP staying constant at ₹31/kg since 2019.
4. Exports allowed sugar mills to liquidate additional stock.

Unless UP is affected in a very big way, with last few years improvement in recovery/yield in UP, India may never face sugar shortage requiring imports like happened in 2009. Domestic sugar demand is ~29-30M tons, any cane shortfall as it happened this year will affect exports/ethanol first.