The tender issued by the Indian Sugar Exim Corporation (ISEC) to buy 1.5 lakh tonne sugar has evoked positive response. | |
| "The response has been good and we will soon evaluate the bids on quality as well as price parameters. The main parameter is quality rather than prices thus an analysis of all samples would be done," said S L Jain, member-secretary with ISEC. |
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| According to sources, response to the tender amounted to about 2.4 lakh tonne. ISEC had issued this tender to buy about 1.5 lakh tonne sugar towards sale to Trading Corporation of Pakistan. The corporation has got approval from the Indian government to sell sugar to TCP via free sale route. Towards this, ISEC can source grain from any sugar mill in the country, with or without re-export obligation |
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| While Jain refused to comment on the bid price, a Chennai-based miller who has bid to sell 10,000 tonne, said, "I have quoted Rs 2,050 per 100 kilograms, ex-Chennai". This, price, however, market players suggest is higher than the prevailing market price of Rs 1,970-1,985 per 100 kg. |
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| Further, the NCDEX May sugar M contract deliveries are on the higher side-about 19,140 tonne and 100 per cent of open interest, as expected. This is largely following a glut in the market. With deliveries being on the higher side, prices are likely to remain bearish. |
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| Market availability of sugar in May was about 16.06 lakh tonne - including a free sale quota of 14.5 lakh tonne and levy of 1.56 lakh tonne. Though it was lower than the total quota in April -about 18.31 lakh tonne - market demand in May has been lower. It is now likely that millers' sale price of sugar may see a further drop as they rush to clear the existing quota. |
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| At present, ISEC holds orders of over 2 lakh tonne, from TCP, of which 95,000 tonne has been shipped from Mumbai and Chennai ports. It has also won a recent tender of TCP amounting to 40,000 tonne at the bid price of $506 a tonne. ISEC also plans to bid for the next tender to be issued by TCP. |
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| Till date, ISEC's exports were done against the re-export obligation licenses held by various mills, including Dhampur Sugar. This had led some mills to charge ISEC a hefty premium, as high as $15 a tonne in some cases, to use their respect license. |
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| The permission to export an additional 1.5 lakh tonne would allow ISEC to export about 3 .5 lakh tonne. ISEC, however, is inclined to export more. As per Indian Sugar Mills Association's estimates, Pakistan is expected to have a sugar deficit of 7-8 lakh tonne per annum for two years. |
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| In the current sugar year, TCP has already contracted 4 lakh tonne of white sugar from various sources like the Dubai-based Al Khaleej and India's ISEC. |
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| In 2005-06, India's sugar production is estimated at 190 lakh tonne compared with 127 lakh tonne last year. In line with rising sugar production capacities, especially in Uttar Pradesh, the output in 2006-07 is expected at 225 lakh tonne. |
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