Maharashtra sugar companies cut export floor price to Rs 1,275/qtl

Co-operative sugar mills in Maharashtra have declared a new export floor price of Rs 1,275 a quintal for shipment from Jawaharlal Nehru Port Trust, Prakash Naiknavare, managing director, Maharashtra State Co-operative Sugar Factories Federation, said today. "Earlier the price was fixed at Rs 1,325, ex-mill basis," he said.

The state export cell under the Maharashtra sugar commissioner fixed the price after a meeting recently, he said. Naiknavare said domestic floor price for south Maharashtra mills has been set at Rs 1,320 a quintal, while for rest of the mills the state levy price would be treated as the floor price.

Floor prices for the commodity are being fixed to support falling domestic prices in the wake of huge supplies and negligible demand.

India's sugar output in 2006-07 (October-September) is likely to top 25 million tonne. The country had produced 19.3 million tonne of the sweetener last year. Wholesale prices have slipped from Rs 1,900-2,000 in October to Rs 1,400-1,500 currently

Naiknavare also said the state has already produced 7.6 million tonne sugar till April 4 since the crushing began in October compared with 5.2 million tonne last year.

Maharashtra's sugar output is likely to be 8 million tonne in the current sugar season ending September.

Meanwhile, with the poll panel delaying clearance to the government's decision of incentivising sugar sector, exports of the sweetener have come to a halt as mills are reluctant to enter into any fresh contract with importers.

"The export is not taking place as millers are still waiting for an official announcement of the package," an official from a sugar firm having substantial export obligation said.

The Cabinet Committee on Economic Affairs, which decided to incentivise the sugar industry by extending export subsidy, referred the matter to the Election Commission for its clearance due to the ongoing assembly polls in Uttar Pradesh.

"Sellers are in a wait-and-watch mode following indications by the government to give export subsidy," Rakesh Sharma, an analyst at K S Commodities, said.

Sharma said the sellers would prefer to wait for formal announcement of the sops so that they can be compensated for the falling international prices.

Some of the sugar mills have opted for delaying their export release orders originally valid only for two months as they want to wait for the decision to come into effect, the official said.

He, however, said the incentives would not give much benefit to the millers undertaking sugar exports as global market would discount the subsidy factor.

Foreign buyers are asking for a price below $300 a tonne on reports of the government giving export subsidies, market sources said, adding they were earlier offering $305-310.

Exports during the current sugar season ending September 2007 were expected to be around 10 lakh tonne, they said, adding that shipments would get affected due to monsoon rains during June-August.

The release order to the tune of about 8 lakh tonne has been issued under open general license since January when the ban on sugar exports was completely lifted.

Sugar output in the country is estimated to cross 26 million tonne in 2006-07 season against 19.3 million tonne last year as all the sugar producing states are producing more than last year, industry sources said.