Writes to food ministry, asks for 2 million tonnes export.
With domestic sugar output estimate in the current sugar season pegged in excess of 25 million tonnes, the apex industry body Indian Sugar Mills Association (Isma) has sought government’s permission to export two million tonnes.
In a letter to the food ministry last week, the association has requested the government to allow export of two million tonnes so the industry gets advantage of the better international prices. This is over and above the export of one million tonne under export obligation which the government has allowed. Mills have been asked to ship about 0.25 million tonnes of sugar by November and the rest by the March 2011 deadline.
“Sugar mills can realise a premium of Rs 400-500 a quintal in the export market and the industry should be allowed to export. It does not happen too often that the country gets an opportunity to export sugar at a premium. When we exported last time, the government had to provide export freight assistance,” said an association executive.
The sugarcane crop this year is pegged at around 346 million tonnes after a recent meeting of the state sugarcane commissioners. With this size of sugarcane crop, sugar output should not be less than 25.5 million tonnes, according to industry estimates. This is much higher compared to 19 million tonnes in the previous season.
With an opening stock of five million tonnes, sugar availability for the next season will be 30.5 million tonnes. Considering a domestic consumption of 22-23 million tonnes and earmarking another four million tonnes for the next season’s opening stock, the country will be left with a surplus of 3.5 million tonnes.
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The buoyancy in international sugar prices due to apprehension of lower crop in Brazil, world’s biggest producer, is driving prices. Sugar prices, which had dipped to 15 cents a pound in May have bounced back to 25-26 cents now. Prices have touched a seven-month high, making exports from India viable. The global market may not end up having a three million tonnes surplus next year as was projected earlier.
Rising uncertainties about the shape of the Brazilian shipments and tightness in most other global markets (floods in Pakistan and China, drought in Russia) have led to predictions that global sugar prices will remain firm until the middle of 2011.