India exports 3L tonne sugar; global prices fall

BANIKINKAR PATTANAYAK
Posted: Friday, Jun 22, 2012
Financial Express
New Delhi: Indian mills exported 3,01,000 tonne sugar as of June 15 after the government lifted quantitative restrictions in early May, aiding a fall in global prices.

Until June 15, mills received permits to export 4,28,000 tonne, senior industry executives said on Thursday.

Unrestricted exports by India, the world’s second-largest sugar producer and the biggest consumer, has further pressured the global market, already awash with supplies from Brazil and Thailand.

US raw sugar futures crashed 27% in 2011, the first annual fall in four years, on higher output in Asia and Europe. Prices fell 8.53% in May and have shed around 10% this year after recovering from a more substantial fall until the first week of this month, anticipating a revival in demand from West Asia and Bangladesh ahead of the Muslim fasting month of Ramadan beginning July. New York sugar futures gained 0.8% on Wednesday to 21.74 cents per lb. Despite a fall in prices so far this year, exports are still more remunerative for Indian mills as domestic wholesale prices have remained subdued due to adequate supplies and the rupee has depreciated sharply. Ex-factory sugar prices in Mumbai were in the range of R3,042 to R3,191 a quintal, on Thursday.

India had allowed shipment of two million tonne in the current marketing year through September before lifting the restrictions last month to help mills clear payment to farmers for previous cane purchases. The government had permitted 1.5 million tonne under the open general licences last year in three equal tranches, starting April 2011, after a gap of two years when it faced a shortage. A drought in 2009 forced India to import about two million tonne after exporting the usual 4-5 million tonne a year, which sent New York raw sugar futures soaring to their highest levels in nearly 30 years.

India’s sugar output jumped 8% until end-May to 25.5 million tonne due to higher cane crushing. The Indian Sugar Mills’ Association has prediction production to rise to 26 million tonne, compared with the expected consumption of around 21.5-22 million tonne.

Industry executives expect surplus sugar output in the next marketing year as well, likely keeping domestic supplies steady and preventing a flare-up in prices.

ISMA director general Abinash Verma said, “It is certain that production in ensuing season 2012-13 will be higher than the domestic consumption and India will continue to export sugar.” National Federation Of Co-operative Sugar Factories Ltd managing director Vinay Kumar has said, “Based on current sowing, sugar production in 2012-13 would touch 25 million tonne.”

Global sugar surplus might halve to 3 million tonne in 2012-13, International Sugar Organisation senior economist Sergey Gudoshnikov said in late April, likely benefitting India if it would decide to export next year as well.

Sugarcane planting went up around 5% from a year before to 5.17 million hectares as of June 15, official data showed. Sugarcane is sown in summer and harvested from mid-September.