 "Sugar exports from India poised to rebound")
Sugar exports from India, the world's second-biggest producer, are set to climb next season as an end of state curbs on local sales sends domestic prices lower and encourages mills to boost overseas shipments.
Supply will be available for exports in the 2013-14 season that starts in October, according to Abinash Verma, director general of the New Delhi-based Indian Sugar Mills Association (Isma). Domestic prices in India for white sugar are about 10 per cent higher than futures in London, discouraging exports for now.
Global refined sugar prices have dropped 11 per cent in the past year as oversupply of sweetener overwhelmed processors. India's government said April 5 it will allow mills to freely sell sugar in the local market for the first time in four decades. The crop starts being harvested in India in October.
White sugar futures on the National Commodity & Derivatives Exchange Ltd in Mumbai are Rs 2,928 a quintal ($542.90 a tonne) today, compared with $500 a tonne on NYSE Liffe in London. The London price is down 4.5 per cent this year after falling 33 per cent the past two years.
India shipments
Shipments from India have been about 35,000 tonnes since the current season started on October 1 compared with 3.4 million tonnes for the entire 2011-12 season as high domestic prices discouraged exports, Isma estimates. Exports in 2013-14 could be 500,000 tonnes if domestic prices fall below global levels, according to Charlotte Kingsman, an analyst in New Delhi at Kingsman SA, a Lausanne, Switzerland-based research company.
The nation's stockpiles will climb 37 per cent to 9.2 million tonnes by October from a year earlier, the most since 2008-09, said Vinay Kumar, managing director of the National Federation of Cooperative Sugar Factories Ltd.
Indian sugar makers were curbed by a policy that set limits on sales by each mill to cap prices, while states fixed cane rates to help 50 million farmers. The government also said it will stop buying sugar from producers at below market prices, with the changes to take effect this season. A notification of the exact date has yet to be published.
"Freedom unfortunately means that people tend to sell quicker than they buy," Robin Shaw, an analyst at Marex Spectron Group in London, said on May 1. "Producers need cash and they can only get cash from sugar, so they have to sell their sugar while the buyers don't need to buy in advance, so you could see that the first effect of de-control will be a tendency to sell."
Sugar surplus
Sugar output in India will be 24.6 million tonnes in 2012-13, beating consumption of 22.5 million tonnes, leaving a surplus of 2.1 million tonnes, according to Isma. Production may be as high as 25 million tonnes, Green Pool Commodity Specialists Pty, a Brisbane, Australia-based researcher, estimates.
"Uttar Pradesh had a very good crop and Maharashtra wasn't as bad as what people thought," Tom McNeill, a director at Green Pool, said in a telephone interview on April 30. "There were numbers as low as 20 million tonnes for this year and it's going to end up near 25 million, an incredible outcome really, but that's because cane prices have been very good."
Supply will be available for exports in the 2013-14 season that starts in October, according to Abinash Verma, director general of the New Delhi-based Indian Sugar Mills Association (Isma). Domestic prices in India for white sugar are about 10 per cent higher than futures in London, discouraging exports for now.
Global refined sugar prices have dropped 11 per cent in the past year as oversupply of sweetener overwhelmed processors. India's government said April 5 it will allow mills to freely sell sugar in the local market for the first time in four decades. The crop starts being harvested in India in October.
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"With deregulation in India, there may be changes in the marketing patterns of the mills resulting in more material hitting the market immediately when crushing starts," Vijay Iyengar, managing director of Agrocorp International Pte, a Singapore-based commodity trader, said by phone on April 30. "In the months between October to let's say when the crush is going on, to March or April, sugar prices should be under pressure and at that point, there could be some exports."
White sugar futures on the National Commodity & Derivatives Exchange Ltd in Mumbai are Rs 2,928 a quintal ($542.90 a tonne) today, compared with $500 a tonne on NYSE Liffe in London. The London price is down 4.5 per cent this year after falling 33 per cent the past two years.
India shipments
Shipments from India have been about 35,000 tonnes since the current season started on October 1 compared with 3.4 million tonnes for the entire 2011-12 season as high domestic prices discouraged exports, Isma estimates. Exports in 2013-14 could be 500,000 tonnes if domestic prices fall below global levels, according to Charlotte Kingsman, an analyst in New Delhi at Kingsman SA, a Lausanne, Switzerland-based research company.
The nation's stockpiles will climb 37 per cent to 9.2 million tonnes by October from a year earlier, the most since 2008-09, said Vinay Kumar, managing director of the National Federation of Cooperative Sugar Factories Ltd.
Indian sugar makers were curbed by a policy that set limits on sales by each mill to cap prices, while states fixed cane rates to help 50 million farmers. The government also said it will stop buying sugar from producers at below market prices, with the changes to take effect this season. A notification of the exact date has yet to be published.
"Freedom unfortunately means that people tend to sell quicker than they buy," Robin Shaw, an analyst at Marex Spectron Group in London, said on May 1. "Producers need cash and they can only get cash from sugar, so they have to sell their sugar while the buyers don't need to buy in advance, so you could see that the first effect of de-control will be a tendency to sell."
Sugar surplus
Sugar output in India will be 24.6 million tonnes in 2012-13, beating consumption of 22.5 million tonnes, leaving a surplus of 2.1 million tonnes, according to Isma. Production may be as high as 25 million tonnes, Green Pool Commodity Specialists Pty, a Brisbane, Australia-based researcher, estimates.
"Uttar Pradesh had a very good crop and Maharashtra wasn't as bad as what people thought," Tom McNeill, a director at Green Pool, said in a telephone interview on April 30. "There were numbers as low as 20 million tonnes for this year and it's going to end up near 25 million, an incredible outcome really, but that's because cane prices have been very good."