India not expected to export sugar for up to three years

Thursday, 21 February 2013 00:25 - - {{hitsCtrl.values.hits}}

Reuters: India, the world’s biggest sugar producer after Brazil, is unlikely to export the sweetener for up to three years as high production costs price shipments out of the global market and a drought in major growing regions squeezes output.

A lack of shipments from India, which exported sugar in the last two years, would support global prices now trading near two-year lows on a world surplus estimated at about eight million tons.

As the world’s biggest consumer of sugar, India is a key player in the global market and shifting weather conditions can make it an exporter one year and significant importer the next.

India’s imports in 2008/09 and 2009/10 drove a near tripling in global sugar prices, while its exports in subsequent years helped to halve prices from a 30-year high. The Indian sugar year runs from 1 October to 30 September.

“Current prices are not viable for exports,” Indian Sugar Mills Association (ISMA) Director General Abinash Verma, told Reuters.

“As of now, no, we are not exporting. If the prices remain the same, then it will not be viable for us to export.”

Indian sugar futures were trading at Rs. 3,156 per 100 kg by 10:26 a.m., while in London May futures settled at US$ 495.60 a tonne on Tuesday.

Global prices are likely to come under further pressure with new season sugar supplies starting in Brazil from April.

“For exports, India needs a sharp rise in global prices, which is unlikely,” said a Mumbai-based dealer with a global trading firm, who declined to be named because he is not authorised to speak to the media.

“It is unlikely for India to become a sugar exporter in the next three years.”

India’s annual sugar output could drop nearly 7% to 24.3 million tonnes in the year to September 2013, though this would still exceed domestic consumption of about 23 million, the ISMA estimates.

India is likely to import 1.5 million tonnes of sugar in the year to September 2013 and imports will continue next year unless import duty is hiked, sugar broker Kamal Jain said.