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09 October 2018
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Indian sugar (The Total Investment & Insurance Solutions)
Indian sugar mills NSE 14.47 % have signed
deals to export raw sugar for the first time in three years as a rally in New
York prices to seven-month highs along with government subsidies made exports
lucrative, five dealers and two industry officials told.
Mills
in the world's second biggest sugar producer were reluctant to sign new export
contracts until recently as global prices were trading far below local prices.
But a rally in international raw sugar
pricesalong with a rupee hitting a record low has made exports viable.
Mills have contracted to export 150,000
tonnes raw sugar at around $280 per tonne on a free-onboard (FOB) basis for
shipment in November-December, the dealers said.
More Indian exports could weigh on global
prices and trim the market share of rivals Brazil and Thailand, the world's top
two sugar suppliers.
Indian
mills traditionally produce white sugar for local consumption, but this year
they are planning to export raw sugar as the country faces a surplus harvest
for the second straight year.
"In the last few days suddenly things
are moving in favour of Indian mills," said B. B. Thombare, president of
the Western India Sugar Mills Association.
"New York raw prices are rising, rupee is
depreciating and government has also approved incentives for exports.
" India last month approved incentives
such as a transport subsidy for export and a direct cane payment to farmers to
encourage cash-strapped mills to export surplus sugar in the 2018/19 season.
Many mills were waiting for the government
notification after last month's cabinet decision, said a Mumbai-based dealer
with a global trading firm. "As notification was published on Friday mills
have started signing export deals," he said.
WHITE
SUGAR
In March, India asked mills to export 2
million tonnes of sugar and fixed a mandatory export quota for each mill.
But mills managed to export only around
450,000 tonnes in the 2017/18 marketing year that ended on Sept. 30 due to
uncompetitive prices, said Abinash Verma, director general of the Indian Sugar
Mills Association (ISMA).
Mills
will try to achieve the export target of 5 million tonnes in the current year,
Verma said.
Apart from raw sugar, mills have contracted
to export 100,000 tonnes of white sugar at around $305 per tonne, FOB, for
shipment in October-December, three dealers said.
"Whites are going to Middle East and
African countries," said a New Delhi-based dealer with a global trading
firm.
India could start the new season with
inventories of over 10 million tonnes of sugar and could produce another 35
million tonnes in the new season started on Oct. 1, the ISMA estimates.
Indians, known for their sweet tooth, consume
about 25 million tonnes of sugar a year.
Indian mills will produce raw sugar at the
start of the season for exports as they have ample carry forward of white sugar
from last year's crushing to cater local demand, said another Mumbai-based
dealer.
The south Asian country could export 4
million tonnes sugar in 2018/19, including around 2.5 million tonnes of raw
sugar, dealers said.
In
2007/08 India exported a record 2.7 million tonnes of raw sugar and 2.26 million
tonnes of white sugar. The Total
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