By David Brough
LONDON (Reuters) - An expected influx of Indian sugar exports to the global market is unlikely to spur rival exporters in Brazil to increase discounts because Indian tonnages are likely to be moderate, European trade sources said on Thursday.
They said that shipments of Indian raw or low=quality white sugar for export were likely to represent only a small fraction of Brazilian raw sugar tonnages.
"I don't think the Brazilians will discount further -- some 2 million tonnes a month of Brazilian raws are going out quite happily, against potentially 200,000 to 300,000 tonnes a month of Indian bagged raws or whites," a senior European trader said.
Furthermore, cheap freight means that Indian sugar exports to key Asian markets will have only a modest advantage over rival Brazilian offers.
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A selloff in sugar futures on ICE on Wednesday was driven by expectations of an influx of Indian sugar to the world market after authorities decided to subsidise cane growers.
India will, for the first time, pay cane farmers in part for produce that they sell to money-losing mills, government sources said on Tuesday after a cabinet meeting chaired by Prime Minister Narendra Modi.
"News emerging about Indian cane subsidies and exports lacked sufficient clarity to increase the pressure on Brazilian discounts," one European trade source said.
Another trade source said: "If the market rallies, Indian raw sugar could become competitive."
China, Indonesia, Malaysia and Bangladesh offer big potential for Indian sugar exports, a senior Indian miller said on Wednesday, with his country on track to become a net exporter of the sweetener in the coming years.
Discounts on offers of Brazilian high-quality raw sugar were 50-65 points below ICE March futures this week after a sell-off in futures, compared with discounts to nearby futures in late October of around 100 points.
This week offers of low-quality Indian white sugar were at $380-$385 a tonne.
Prompt raw sugar futures on ICE traded at the equivalent of around $323 a tonne.
(Editing by David Goodman)
