Sugar exports may fall by 1 mn tonne

The country's sugar exports in the current season ending September will fall way below the government's target of 2.5 million tonnes as global prices continue to fall in the wake of huge surpluses.

The total white sugar exports are seen only at around 1.5 million tonnes, industry officials said.

The industry had hoped for higher exports at around 3 million tonnes but for the untimely ban on exports by the Centre to curb rising domestic prices and tame inflation. At the time of the ban, global prices were nearing multi-year highs of $500 a tonne.

Exports have been weak despite the government announcing freight subsidies to give incentives to overseas sales. Earlier this year, the Centre had announced an export subsidy of Rs 1,250-1,350 a tonne for sugar exports.

Sugar companies have been getting desperate as their revenues have been hit by falling realisations from sugar sales preventing them from paying their cane dues as well.

Prices have fallen by over Rs 900 a quintal since October to Rs 1,200-1,300 in the wake of huge output estimates of around 25.5 million tonne. The country had produced 19.3 million in 2005-06.

"The future is bleak as both domestic and global sugar output for the next year is also seen much higher and will keep prices depressed," the official said.

Global sugar output for the current season ending September is seen at 167.3 million tonnes compared with 152.6 million tonnes produced in 2005-06.

Early data suggests world sugar output may surge by another 5 million tonne by at least next year.

Domestic sugar output is seen at around 30 million tonnes in 2007-08.

Even doing away with the necessity of export permits, mandated by the Centre at the time of lifting the ban, to contract overseas sugar sale have not been able to remedy the situation.

So far the food ministry has issued permits for around 2.9 million tonne sugar exports for the crop year ending September.

London sugar futures for October delivery fell a whopping $5.70 to $293 a tonne on Monday.

Officials said exports are unlikely to pick up before the new season begins as rains will hamper port activities.

The industry will, however, target higher overseas sales of around 3 million tonne next season.