Indian exporters expect higher demand for sugar from other buyers to offset the losses in Afghanistan and Sri Lanka, due to the current political and economic situation in these markets. Sugar exports have stopped to Afghanistan and Sri Lanka, considered an assured markets as they account for close to 20 per cent of the commodity’s exports.
Afghanistan is the second largest buyer of Indian sugar during the current season ending this month, accounting for about 13 per cent of the record 70 lakh tonnes shipped, while exports to Sri Lanka are estimated to be 5-6 lakh tonnes.
Sugar stakeholders expect higher demand coming in from other countries over supply issues from Brazil, the largest producer.
‘Not a concern’
Developments in Afghanistan and Sri Lankan markets are not a concern, said Rahil Shaikh, Managing Director, MEIR Commodities-India.
“I see them coming back eventually to buy,” he said, adding that demand from other markets will increase the next season (October 2021-September 2022).
“Brazilian production is uncertain as of now. I believe lot of Brazilian companies are transferring their purchases into India and that’s what I see coming,” said Adhir Jha, Managing Director and CEO, Indian Sugar Exim Corporation.“Demand is not going to be a problem. If we start shipments from October 1, we will have brisk exports by March,” Jha said.
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While exports are not happening to Afghanistan, the enquiries have started coming in, said Abinash Verma, Director-General, Indian Sugar Mills Association. Foreign exchange woes, particularly with regard to US dollars, in Sri Lanka has affected shipments.
“We expect that demand will come back from Afghanistan, but not in the same quantity,” Jha said.
Indian exporters have been shipping sugar to Afghanistan on free-on-board basis, insisting on advance payments.
However, industry sources said the exporters have faced issues in Sri Lanka, where payments have been stuck for some players. Moreover, banks are hesitant to extend credit line for exporters shipping to Sri Lanka. “It is difficult to quantify the stuck payments in Sri Lanka,” Jha said.
Prakash Naiknavare, Managing Director, National Federation of Co-operative Sugar Factories, said the loss of Afghanistan market will have some impact as it was an assured market for one million tonnes of white sugar.
Many markets open
“Having said that it is not a big blow for us as the international opportunity for Indian sugar to various destinations is very encouraging. Since Brazilian production has gone and Thailand production yet to catch up, the destinations where these two countries were to supply are open for us like Indonesia, China, Bangladesh, Korea, Malaysia, Middle East. All these markets are waiting for Indian sugar,” he said.
Abhijit Ghorpade, a broker in Kolhapur said the next two years present a good opportunity for the Indian sugar and that the demand for raws would be on the higher side.