India likely to impose ceiling on next season's sugar exports - sources

E I D-Parry (India)

17/06/2022 11:01

* India may cap next season's sugar exports at 6-7 mln T -
sources
    * India has capped current season's sugar exports 10 mln T 
    * India wants ample local supplies to keep lid on prices

 (Updates with market reactions)
    By Rajendra Jadhav and Mayank Bhardwaj
    MUMBAI, June 17 (Reuters) - India is likely to impose a
ceiling on sugar exports for a second straight year starting
this October, aiming to ensure ample domestic supplies and keep
a lid on local prices, industry and government sources said on
Friday.
    India, the world's biggest sugar producer, could cap exports
of the sweetener at 6 million to 7 million tonnes in the 2022/23
October-September season, about one-third less than the total to
be shipped out in the current season, industry and government
sources said. They asked not to be named as they were not
authorised to speak to media.
    A government spokesperson did not immediately respond to a
request for comment.
    The curbs on exports by India, also the world's
second-biggest sugar exporter, could further lift benchmark
white sugar prices  LSUc1 , which are already trading near 5-1/2
year highs, traders said.
    Benchamrk July raw sugar  SBc1  rose 1.88% to 18.93 cents
per lb and August white sugar  LSUc1  jumped 1.77% to $568.70 a
tonne after the Reuters report.
    Meanwhile, shares in leading sugar producers such as Shree
Renuka Sugars  SRES.NS , Bajaj Hindustan Sugar  BJHN.NS  and E I
D-Parry (India) Ltd  EIDP.NS  fell between 2% and 6%.
 
    Among factors underpinning global sugar prices this year are
lower sugar output in Brazil, a leading producer and the biggest
exporter, and crude oil prices at multi-year highs. Higher crude
oil prices encourage sugar mills to divert more cane to produce
ethanol for blending into gasoline.
    Brazil's sugar production is set to rebound during the
current season, but with restricted exports from India, traders
do not expect prices to come down and they instead could go
higher.
    "There is a need to regulate exports to avoid any kind of
panic in the market," said a senior government official with
knowledge of the matter.
    While the sources expected next season's export cap to be
set between 6 million and 7 million tonnes, the exact quantity
will be fixed near the start of the 2022/23 season, they said.
    The government will look at the performance of the monsoon
before fixing the quota, they added.
    Monsoon rains in sugarcane growing areas of the western
India state of Maharashtra, the biggest producer in the country,
were 60% below average since the start of the rainy season on
June 1, according to weather office data.
    New Delhi on May 24 imposed restrictions on sugar exports
for the first time in six years with a cap for this season of 10
million tonnes.  urn:newsml:reuters.com:*:nL2N2XH06I
    Record exports in the current season could bring down
inventories to 6.5 million tonnes on Oct. 1, when the next
2022/23 season starts, versus 8.2 million tonnes a year earlier,
industry and government estimates show.
    Aditya Jhunjhunwala, president of the Indian Sugar Mills
Association, a producers' body, has requested that the
government allow mills to export 8 million tonnes of sugar next
year, as output could exceed this year's record 36 million
tonnes, according to a letter seen by Reuters. The association
did not immediately respond to a request for comment.
    The letter also urged the government for an early decision
on next year's export quota to help mills cash in on firm global
prices.
    India mainly exports to Indonesia, Bangladesh, Sudan, the
United Arab Emirates, Nepal and China.

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Global sugar futures prices    https://tmsnrt.rs/3mU9aPk
Global sugar producers and exporters    https://tmsnrt.rs/3xBhKrp
Year-to-date destinations of India sugar exports    https://tmsnrt.rs/3N4oio2
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Rajendra Jadhav and Mayank Bhardwaj; Editing by
Gavin Maguire and Edmund Klamann)
 ((rajendra.jadhav@thomsonreuters.com; +91-22-68414378 ; Reuters
Messaging: rajendra.jadhav.thomsonreuters.com@reuters.net))