Global rally makes sugar sweeter for Indian exporters

Mumbai/New Delhi, Aug. 19: India could export six million tonnes of sugar in the new season starting in October even without government subsidies, with global prices making overseas sales more lucrative after rising to their highest in 4.5 years, industry officials said on Wednesday.

New Delhi is expected to withdraw sugar export subsidies from the new season as a sharp rise in prices makes it easier for Indian mills to sell on the world market, the most senior civil servant at the ministry of consumer affairs, Food and Public Distribution told Reuters on Tuesday. read more

“Even without the subsidy, India could export 6 million tonnes of sugar provided the market remains stable above 20 cents per lb,” said B.B. Thombare, president of the West Indian Sugar Mills Association.

Benchmark raw sugar prices in New York hit a 4.5 year high of 20.37 cents on Tuesday, supported by fund buying against a backdrop of tightening supplies. It settled at 20.17 cents on Wednesday.

India’s sugar mills should aim to export 6-7 million tonnes of the sweetener in the 2021-22 season by taking advantage of higher global prices, according to a government letter addressed to sugar makers.

Exports from the world’s second-biggest sugar producer could cap the rally in global prices and help to boost supplies in Asia and Africa while Brazil, the world’s biggest exporter, expects to harvest a smaller crop due to drought and frosts.

Brazil’s 2021-22 centresouth sugar production is forecast to fall to 32.5 million tonnes from a June forecast of 34.1 million tonnes, according to food trader Czarnikow.

Shares in Indian sugar producers fell by up to 5 per cent after Reuters reported that India might withdraw sugar export subsidies.