Pricey sugar as India misses export target

INDIA is set to miss its goal for sugar exports this year because of a late start to shipments and logistical challenges, potentially providing further fuel to the sweetener’s blistering rally.

The world’s second-biggest producer, grappling with massive stockpiles, will ship almost 20 percent less than the government’s target and a forecast from a top industry group, according to the median of seven estimates in a Bloomberg survey of traders and analysts.

The risk to supplies comes just as the global market is on a tear. Raw sugar futures posted their 10th month of gains in February, the longest winning run in exchange data going back six decades. With a tightening market because of lower crops in Thailand and the European Union, coupled with robust demand in Asia, a setback to Indian exports may provide a further fillip to the market.

“Although world prices have gone up, exports are going to miss the target,” said Yatin Wadhwana, a director at commodity trading and advisory company Gradient Commercial Pvt. India started shipping later than usual owing to a delay in government subsidies, while a container crunch and the approaching monsoon season will hamper loadings at ports, he said.

The country’s inventories follow a raft of bumper crops spurred by domestic prices that are above global levels. The government has granted a form of subsidy to bridge the gap, but that won’t be enough to reach the target.

Shipments may be only 4.9 million tons in the year that ends in September, according to the survey. That compares with the government’s target of 6 million tons and forecasts for a similar amount from the Indian Sugar Mills Association. The nation exported a record 5.95 million tons in 2019 and 2020.

Container shortages and competition for shipping services from firms exporting increasing amounts of rice and oilseed meal are contributing to delays.

Most people in the market had expected India to be shipping strongly in the first and second quarters of 2021 as the big domestic crop was “well telegraphed to the market,” said Tom Mcneill, director at Brisbane, Australia-based researcher Green Pool Commodity Specialists. “This has now led to a major disconnect in the market— there is plenty of stock in India to be exported, but very little has come out to this time,” he said in a report.