MUMBAI/LONDON- Global sugar buyers are growing increasingly nervous as a much touted surge of Indian sugar exports has failed to materialize, with some mills reluctant to sell even as global prices LSUc1, SBc1 trade near 2-1/2-year highs.
India’s government, hoping to rid the country of its vast surplus stocks, last year approved a sugar export subsidy of 10,448 rupees ($145.58) a ton for the 2019/20 season, looking to encourage some 6 million tons of exports.
Global buyers have been targeting Indian supplies to help meet a global sugar deficit of 6.12 million tons in 2019/20 forecast by the International Sugar Organization.
However, there is little sign for now the government target will be met. Most industry experts say India will export 5 million tons, still up nearly a third on a year earlier, but prices might have to rise even further to draw out more supplies.
“There’s no reason for Indian exports not to be flowing, but here we are,” said Stephen Geldart, analyst at sugar trader Czarnikow.
India vies with Brazil as the world’s biggest sugar producer.
Between October and December, the first quarter of the current season, Indian exports of refined and raw sugar hit 916,000 tons, down slightly from 945,000 tons in the same quarter last year, Czarnikow data shows.
Market talk, however, is of an even steeper slowdown in January, concentrated mostly in Maharashtra, the country’s second-biggest sugar producing state.
Maharashtra mills are in no hurry to export due to bets on a further jump in international prices and forecasts that the state’s production will nearly halve to 5.5 million tons this season, said a dealer at an Indian export house.
Maharashtra exports mostly low-quality white sugar, which is not deliverable against globally traded ICE white sugar futures LSUc1, but which affects them as some physical market consumers can use the sugar instead of deliverable whites.
Also weighing on exports, big private mills in Uttar Pradesh, India’s largest sugar producing state, have exhausted their government-issued export quotas, said Praful Vithalani, president of the All India Sugar Trade Association.
The Indian government, still intent on encouraging exports, could redistribute quotas next month after assessing the export performance of each mill, said a government official who was not authorized to speak to the media. – Reuters
