Indian sugar mills clinch export deals as prices jump -industry

Bajaj Hindusthan Sugar

07/01/2021 14:39

By Rajendra Jadhav
    MUMBAI, Jan 7 (Reuters) - Indian sugar mills are
aggressively signing export contracts after New Delhi approved a
subsidy for overseas sales and as global prices hit their
highest level in 3-1/2 years, four industry officials told
Reuters on Thursday.
    The exports will help the world's second-biggest sugar
producer to bring down stockpiles and support local prices,
which, at odds with the global market, have been falling due to
oversupply at home. 
    But the shipments could cap a rally in benchmark prices in
New York  SBc1  and London  LSUc1 .
    Mills have so far agreed contracts to export 1.5 million
tonnes of sugar in the 2020/21 marketing year that started on
Oct. 1, mainly to Indonesia, Sri Lanka, Afghanistan and African
countries for shipments in January to March, the officials said.
    Contracts were signed between $375 and $395 a tonne on a
free-on-board (FOB) basis, three dealers directly involved in
the deals said. They did not wish to be identified in line with
their organisations' policies.
    "Most of the contracts were done for raw sugar, which is
heading to Indonesia," said Rahil Shaikh, managing director of
MEIR Commodities India.
    Indonesia, which traditionally imports the bulk of its
requirement from Thailand, started buying Indian sugar in 2020
after changing purity regulations for sugar imports.
 urn:newsml:reuters.com:*:nL4N28S1HI
    Out of the 1.5 million tonnes of export contracts signed,
nearly 1 million tonnes was for raw sugar, while the rest was
for white sugar, dealers said.
    Sri Lanka, Afghanistan and African countries are buying
small amounts of white sugar, but demand is limited for whites
due to a shortage of containers, they said.
    "Currently mills' net realization from exports is higher
than domestic sales after adding the government subsidy for
exports," said a Mumbai-based dealer with a global trading firm.
    In mid-December, India approved a subsidy of 5,833 rupees 
($79.53) per tonne to encourage cash-strapped mills to export 6
million tonnes of sugar in the 2020/21.  urn:newsml:reuters.com:*:nL1N2IW0LA
    Shoring up domestic prices of sugar will help ensure that
millions of Indian farmers get the price set by the government.
    The government fixes sugar cane prices that mills must pay
to farmers, but with sugar prices under pressure mills were
struggling to pay the mandatory price for cane.

($1 = 73.3390 Indian rupees)

 (Reporting by Rajendra Jadhav; Editing by Susan Fenton)
 ((rajendra.jadhav@thomsonreuters.com; +91-22-68414378 ; Reuters
Messaging: rajendra.jadhav.thomsonreuters.com@reuters.net))