The firming trend in global sugar prices, coupled with a weakening rupee, seems to have brightened the prospects for resumption of exports from the country.
The sugar market in London has breached the technical resistance of $500-a-tonne and in New York, the sweetener trades above 17 cents a pound on concerns of a frost affecting the cane crop in Brazil, the largest producer.
“At over $500 a tonne, exports are seen viable and shipments should resume soon,” said Vinay Kumar, Managing Director, National Federation of Sugar Co-operatives Ltd.
He expects shipments of two to three lakh tonnes in the next few months, depending on global prices and the rupee-dollar exchange rate. The rupee has weakened by over 10 per cent in recent months.
According to industry estimates, hardly 60,000-80,000 tonnes of sugar have been exported in the current season as shipments have not been viable as international prices were ruling lower.
In the 2011-12 sugar season, exports about 3.3 million tonnes of sugar were exported.
“It is a touch-and-go kind of situation” said Kiran Wadhwana, Director at Comdex India, a New Delhi-based sugar brokerage, stating that shipments had been happening in small quantities.
“The exports might become viable if global prices firm up or rupee weakens further from the current level,” he said.
“While the current market dynamics aided by a weaker currency will make exports viable, there’s hardly any buying from overseas customers,” a merchant exporter in Kolhapur said.
Those exporters with established links with buyers have been shipping out the sweetener in small quantities.
According to the Indian Sugar Mills Association, the opening sugar balance for the next season is expected to be around 80 lakh tonnes, 20 lakh tonnes more than the normative opening balance that the Government would like to have.
The early crop estimates by ISMA peg the country’s sugar output in the year starting October 2013 at 23.7 million tonnes, about 5 per cent lower than current season’s 25 million tonnes. The projected decline is on account of the lower cane acreage as planting was affected by drought in parts of Maharashtra, Karnataka and Tamil Nadu.