Indian sugar exporters have adopted a “wait and watch” policy to enter into new export contracts as prices in the global markets have dropped below the multi-year highs witnessed till October.

“Indian mills are not in a hurry to sell sugar as previous sales are yet to be executed. Also, they do not like the current global prices, which shall have to move up to attract more Indian sales,” said All-India Sugar Traders Association (AISTA) Chairman Praful Vithalani. According to AISTA, exporters have struck deals to ship out 33 lakh tonnes (lt) during the current season (October 2021-September 2022). Of this, 9.39 lt have been shipped with raw sugar making up 4.69 lt.

Dispatches

The association, quoting Dr Amin Controllers Pvt Ltd, said physical sugar dispatched from mills so far has been 14.07 lt. At least 4.68 lt of sugar from this are in transit to the ports, while 7.79 lt have been shipped, including 4.69 lt of raw sugar.

Maharashtra mills have struck the highest export deals given their proximity to the ports but they are facing logistics problems, AISTA said, adding that there were problems in transporting sugar by road as well as rail.

Last week, the Indian Sugar Mills Association (ISMA), a body of private sugar mills, said it estimated deals to export sugar at 35 lt with most being done when prices ruled at 20-21 US cents a pound (₹33,500-35,200 a tonne).

As global prices dropped below 19 cents a pound (₹31,850) to a four-month low on November 30, mills were not coming forward to sign new deals. Prices dropped on fears that the Omicron variant of coronavirus would affect consumption.

Prices rebound

However, with fears over the Omicron variant easing, prices have begun to rebound. On Tuesday, sugar for delivery in March on the Intercontinental Exchange, New York, was quoted at 19.30 cents a pound (₹32,350 a tonne). Last season, India exported a record 71 lt of sugar and this season, shipments are expected to be between 60 lt and 70 lt. During 2019-20, New Delhi shipped out 59 lt.

Indian exports have been helped by higher carryover stocks and steady production. ISMA has projected sugar production at 31 million tonnes (mt) this season, the same as last, with at least 3 mt going towards ethanol production. Opening stocks this season are pegged at 8.5 mt against 10.7 mt the previous season. For the next season, opening stocks are estimated to be seven mt.

Exports during the last two seasons were also helped by the Centre offering incentives for transportation. Last season, sugar exports got a ₹3,500 crore assistance package and in the 2019-20 season, it extended a ₹6,500 crore package.

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