Sugar mills seek govt nod to export 1.1 lakh tonne

Sugar mills in India, the world's second-biggest producer, have sought government permission to export 110,000 tonne in the first two weeks after the country lifted a ban.

The quantity is a tenth of the 1 million tonne sugar mills are expected to ship this year. The government has so far issued permits to export 37,000 tonne and will process applications for the rest this week, a food ministry official, who declined to be identified, said today in a phone interview from New Delhi.

India eased a six-month ban on sugar exports December 18 before lifting it completely last week as output heads for a record. A resumption in shipments from India may extend losses in global prices that have declined by a third from a May peak as farmers from Brazil to Thailand increased plantings.

"Exports may pick up further in the coming days,'' Vinay *Kumar, managing director of National Federation of Cooperative Sugar Factories, said.

"With a record production, mills may export even at a loss.''

India's sugar output may rise to a record 24 million tonne in the year to September, six per cent more than a previous estimate, Agriculture Minister Sharad Pawar said January 5. That's raised the pressure to boost exports and avoid a domestic glut.

White sugar for March delivery on London's Euronext.liffe rose $1, or 0.3 per cent, to $326 a metric ton yesterday. Prices ended last week at $325, the lowest since December 2005. Global supply may exceed demand by 5.1 million tonne this year, according to London-based C. Czarnikow Sugar.

Indian mills have asked the government to provide a subsidy of at least Rs 2,000 a tonne to make exports competitive amid a slump in world prices and a bumper harvest in other producing nations including Brazil and Thailand.

"If they don't provide subsidy, exports won't make any sense as mills will lose money,'' said Ajit Chowgule, secretary of Maharashtra State Federation of Cooperative Sugar Factories, a grouping of sugar producers.

India halted sugar exports on July 4 to augment supplies and curb inflation. On December 18, mills that imported raw sugar duty-free in 2005 under the so-called advance license to meet a shortage were permitted to export an equivalent amount. The ban was fully lifted on January 11.

Sugar prices for immediate delivery have fallen 17 per cent to Rs 1,617.10 ($36) per 100 kilograms on India's National Commodity & Derivatives Exchange since July 4.