Indian Sugar Exports Poised to Hit Record 5 Million Tonnes This Year

India, the world’s biggest sugar producer, is expected to cross its own export record this year. This is attributed to a flurry of overseas sales in the past few months driven by attractive global prices, said trade and industry officials on Tuesday.

In the new season, which began on October 1, 2019, sugar mills in India have done deals to export 2 million tonnes, raising hopes that the country would sell at least 5 million tonnes globally in the season of 2019/20, over 30 per cent higher than previous year.

“Looking at the current trend, I can tell you with a lot of confidence that we’ll be able to export at least 5 million tonnes this year,” said a New Delhi-based dealer from the Indian unit of a global trading firm.

At 5 million tonnes, Indian exports would exceed their previous peak of 4.96 million tonnes which was shipped in 2007/08 as per the trade and industry data. This was spurred by a rally in international prices, a weak Indian rupee and a clutch of government subsidies which made exports lucrative.

“Compared to last year, exports got the momentum this year from the start of the season due to an improvement in sugar prices,” said Mr Rahil Shaikh, managing director of MEIR Commodities India.

The strong rise in exports from India, also the world’s biggest sugar consumer, could weigh on benchmark prices in New York and London and trim the market share of rivals – Brazil, Thailand and Australia which are the world’s top sugar suppliers.

Higher sugar shipments from India also expected to intensify the dispute at the World Trade Organization (WTO).

Brazil has already mentioned that India’s subsidies for sugar exports were not in line with WTO rules and would impact free competition in the global market. Brazil, Australia and Guatemala have questioned the subsidies at the WTO.

India, grappling with surplus sugar supplies, has approved a subsidy of Rs 10,448 (US$ 145.58) per tonne for exports in 2019/20 season – a move that encouraged mills to clinch overseas sales deals early this year.

Traders have contracted to export raw sugar at an average of US$ 300 per tonne and white sugar at US$ 330 per tonne on a free-on-board (FOB) basis, said three dealers directly involved in the deals. However, they did not wish to be identified in line with their organisations’ policy.

In contrast to the 2 million tonnes of exports contracted so far this year, in the first three of the 2018/19 season Indian mills were only able to sell about 850,000 tonnes of sugar.

Source: IBEF

Image Courtesy: Rural Marketing