India’s 2014/15 sugar exports seen at 1.0-1.5 m tons

Tuesday, 4 November 2014 02:20 - - {{hitsCtrl.values.hits}}

Reuters: India is likely to export up to 1.5 million tonnes of sugar in the year that began in October if the government extends incentives for exports of the raw variety, the country head of Sucden, one of the world’s top sugar traders, said.

India, the world’s biggest sugar producer after Brazil, exported 2.1 million tonnes, mostly raws, in the year to September 2014 after the government gave export incentives to help mills cut back large stockpiles at their warehouses. Raw sugar exports from India will dampen benchmark New York prices that fell 1.6 percent on Friday to settle at 16.04 cents a lb, weighed down by the strong dollar and abundant global supplies. “Because of surplus production, we’ll be able to export anywhere between 1.0-1.5 million tonnes of raw sugar but mills need government subsidies because of unfavourable prices,” Yatin Wadhwana, managing director of Sucden India Pvt Ltd, told the Reuters Global Commodities Summit. India is set to produce surplus sugar for the fifth straight year that began in October. Bumper production in the past bumped up supplies, hammered local prices and hit mills’ financials. To help the beleaguered mills, the government in February gave 3,300 rupees ($53.7) a tonne subsidy for production and exports of raw sugar for the 2013/14 year. Last week government sources said India would consider extending the incentives for raw sugar exports after leading cane growing states forecast their sugar output for the new season. Mills are likely to churn out 25.5 million tonnes of sugar in 2014/15. India’s sugar stocks on Oct. 1, when the new season began, were at 7 million tonnes. For the 2014/15 season, the government will have to raise its export subsidy from the previous year as prices have fallen further this year, making exports difficult, said Wadhwana. Local sugar prices, that have remained subdued for years, could fall further if the government does not give export incentives, he said. Because of the lower prices, higher cane rates and large stockpiles, money-losing mills are now defaulting on their loans and banks have refused giving working capital to sugar companies. Global prices are also seen rangebound in the absence of “any major move” in the market, said Wadhwana. “(Nevertheless) I see a lot of refineries in India, Asia and the Middle East buying Indian raw sugar because of easy logistics and lower freight costs,” he said. A jump in sugar refining capacity in Asia and Africa is set to help India boost exports of the raw variety of the sweetener and reduce its bulging stocks.