Raw sugar exports on the rise

With more than two months left for the new sugar season to begin, the country is gearing up to export higher amounts of raw sugar and the focus is shifting from plantation white sugar to raw sugar export.

The Indian Sugar Exim Corporation has so far contracted export of a record 5.35 lakh tonnes of raw sugar for supply in the 2007-08 (October-September) season.

As more such contracts are likely to be made, exports of raw sugar in 2007-08 is certain to overtake exports of plantation white sugar in volume terms for the first time.

For the current season, export of plantation white sugar is estimated at about 12 lakh tonnes.

In June, the corporation had contracted an export of 2.35 lakh tonnes raw sugar with the Dubai-based Al-Khaleej refinery at a rate of $246.5 a tonne, free onboard Mundra, for shipment between December and March.

On Wednesday, the corporation again contracted exports of 3 lakh tonnes raw sugar (2 lakh tonnes with Al-Khaleej and 1 lakh tonnes with Cargill) for shipment between December and April.

"The rates at which this export has been contracted are better than the $246.5 a tonne, at which we made the July contract, as raw sugar prices have firmed up," said an ISEC official while declining to disclose the exact rates.

According to Bloomberg data, raw sugar prices have averaged 9.83 cents a pound, or $216.7 a tonne, since July 1, compared with 8.87 cents a pound, or $195.5, in June. The spurt in global raw sugar prices is primarily due to the 9 per cent cut in sugar production by mills in Brazil, the largest sugar producing country, to produce more ethanol.

Since all these shipments will be made between December and April, they will be eligible for the union government's transport subsidy of Rs 1350 (for coastal mills) and Rs 1450 (for non-coastal mills) a tonne.

"In the coming years, export of raw sugar will be far greater in quantity than that of plantation white sugar. Raw sugar has a market of 6 million tonnes in neighbouring countries like Dubai, Iran and Bangladesh, which is currently dominated by Brazilian sugar. ," said S L Jain, director general of the Indian Sugar Mills Association.

Our sugar is in no way inferior to the Brazilian quality and therefore we should tap these markets. Moreover, India has a freight advantage in selling to these nearby countries. Exports will help arresting a price decline

These countries were formerly buyers of plantation white sugar but with the setting up of refining capacities over last couple of years, they have become buyers of raw sugar.