You are here: Home » Economy & Policy » News
Business Standard

Meeting 5-mn tonne sugar export target seems tough due to global volatility

Efforts are on to increase shipment to Bangladesh, China and Malaysia; the Middle East turns out to be the largest buyer so far

Dilip Kumar Jha  |  Mumbai 

sugar

India is finding meeting the 5-million-tonnes target difficult and is likely to miss it this year due to sharp volatility in global prices, though the rupee's movement against the dollar make its exports intermittently viable.

Industry sources said that the recent spurt in global sugar prices has made India’s exports ofthe commodity viable. Hence, sugar factories across India have tied up for nearly 1 million tonnes of the raw sugar exports the past one month. China and the Middle East are major buyers of India’s raw sugar.

The momentum, however, is unlikely to continue going forward, due to frequent changes in production numbers and huge volatility in global prices. Still, Indian exporters are looking for opportunity to flush out as much sugar as possible.

“Based on interactions with global players, the world market wants 3-3.5 million tonnes of Indian sugar. With little marketing effort, we can achieve exports of 4-5 million tonnes for the current season, i.e. October 2018-September 2019,” said Abinash Verma, Director General, (ISMA).

Sao Paulo–based global commodity consultancy Datagro estimates the world market to turn into a deficit of nearly 0.7 million tonnes now, a sharp swing from its previous projection of 3.68 million tonnes of annual surplus. Lower sugar production forecast for the current season is primarily dedicated to a decline in the sweetener output in India, Europe, Russia, Thailand and the United States. During the crushing season October 2017-September 2018, the world market was in surplus of 8.35 million tonnes.

In fact, the world’s largest cane grower, Brazil, has also joined the race to produce lower sugar this year by diverting cane towards ethanol production to meet the country’s fuel requirement. The consultancy again cut its estimate for Brazil’s center-south sugar output this year, to 27.29 million tonnes from 27.93 million tonnes previously, due to expectations for higher-than-anticipated use of cane to produce ethanol.

The long spell of has started in most cane-growing nations and is expected to continue till May 2019. Further extension in the dry spell may spill over to the next monsoon season in India.

“Bangladesh wants 2.5-3 million tonnes of raw sugar which is currently being imported from Brazil. Due to logistics and geographical advantages, India’s sugar exports to Bangladesh are workable. Another delegation is currently visiting China. We will soon visit Malaysia also with our offer. We urge Indian exporters not to see short-term gains but to export sugar as much as possible. Mills in Maharashtra will be able to achieve an export quota of 1.55 million tonnes. Sugar mills in Uttar Pradesh should also sync their allotted quantity with factories in Maharasthra to achieve the overall export target,” said Sanjay Khatal, Managing Director, Maharashtra State Co-operative Sugar Factories Federation.

Sugar prices in the benchmark InterContinental Exchange (ICE) hit a multi-year high of cents 14.01 a pound on October 24 after touching the multiple-year low of cents 10.91 on September 27. Again, sugar prices declined marginally to trade at cents 13.18 a pound on Tuesday.

Similarly, the rupee depreciated to hit the lifetime low of 74.38 against the dollar on October 9 after touching a high of 72.49 on September 28. Again, rupee climbed back to trade at 73 against the dollar on Tuesday.

Prakash Naiknavare, Managing Director of National Federation of Cooperative Sugar Factories Ltd, however, said that sugar mills have the opportunity to take advantage of surplus availability in India and boost their exports till March 2019.

Apex industry body ISMA in August forecast India’s sugar production at 35-35.5 million tonnes which was revised downwards to 31.5 million tonnes in October due to water logging in cane fields in Uttar Pradesh and white grub infestation in the standing crop in Maharashtra.

The government offers Rs 8.5 a kg as subsidy on raw sugar exports in order to boost shipments from India.

First Published: Tue, November 06 2018. 18:54 IST
RECOMMENDED FOR YOU