Sugar companies exports touch 0.8 mt

The Directorate of Sugar in the Union food ministry has given permits for the export of 1.8 million tonnes of sugar since the ban was lifted last December.

"Sugar companies have already shipped about 0.8 million tonnes of sugar and are planning to export around 1.5 million tonnes in the 2006-07 sugar year (October-September). We are taking little time in issuing permits as we want more sugar to get exported," said a directorate official.

On March 24, the government had declared an export subsidy of Rs 1,350 a tonne for sugar mills in the coastal areas and Rs 1,450 a tonne to factories situated in the northern states. The decision was taken to help sugar millers export sizeable quantities and get rid of the surplus stock that was putting pressure on prices.

"We are producing sugar of 45 ICUMSA (International Commission for uniform methods of sugar analysis) for which a market has been created after the European Union reduced its production. The low ICUMSA sugar enjoys a premium in the international market. Though the London sugar price is ruling at $322-323 a tonne, we have been able to contract exports at $350 due to the lower ICUMSA", said Sanjay Tapriya, director (finance), Simbhaoli Sugar Mills. The company has shipped 26,000 tonnes sugar so far and is looking to export another 20,000 tonnes this sugar year.

"The market is down as sugar is surplus worldwide but we are exporting under our obligation," said M Manickam, managing director of Shakti Sugars, which has exported 30,000 tonnes this year.

The country is estimated to produce sugar in excess of 27 million tonnes this time, about 40 per cent higher over last year's 19.2 million tonnes while the consumption demand remains at 19-19.5 million tonnes.

Bloomberg adds:

Indian Sugar Exim Corporation, an industry-funded trading firm, won a contract to ship 200,000 tons to Dubai-based Al Khaleej Sugar, Asia's largest refiner, Vinay Kumar, member secretary of Sugar Exim, said today. The company hopes to secure more orders when it starts supplying in December.

Indian mills can save as much as Rs 1,000 ($25) a tonne in processing costs by not refining raw sugar, and they can sell more of the commodity to Bangladesh, Saudi Arabia, Indonesia and Egypt, which are building refineries. Supplies from India may weigh on prices in New York and challenge Brazil and Thailand, the world's largest exporters of raw sugar.

"Refining capacity is rising in West Asia, Africa and even in some Asian countries," Kumar said. "We hope to be a leading supplier. There is a big market out there for raw sugar."

India currently produces only plantation grade white sugar as the nation consumes nearly 19 million tonnes annually. Although the best quality refined sugar has a premium of over $70 a tonne over raw sugar, lower purity Indian white sugar may command a premium of only $25 a ton, according to industry officials.

Mills can easily switch production capacity to raw sugar, an intermediate product that needs refining to make it fit for human consumption.

Raw sugar prices have dropped 44 per cent in the past year, making it the worst-performing commodity on the Goldman Sachs Commodity Index. Global output will exceed demand by 9.8 million tonnes this year, according to ED&F Man Holdings, the world's biggest sugar trader. Refined sugar futures for August delivery closed at $318 a tonne yesterday in London. The raw sugar contract traded in New York settled at 8.69 cents a pound ($192 a metric tonne).

Lower global prices for refined sugar have deterred some of India's biggest producers including Bajaj Hindusthan and Balrampur Chini Mills from exporting large amounts. Mills have shipped 750,000 tonnes after the government ended a six-month export ban in January.

India's sugar output may climb to 28.79 million tonnes by September 30, 2008, from an estimated 27.43 million tonnes this year, the Foreign Agricultural Service at the US embassy in New Delhi said in a report on April 20.