With a high demand for Indian sugar in the international market, mills are racing to ink agreements for exports.
Speaking to The Indian Express, Rahil Shaikh, vice-president of the All India Sugar Traders Association, talked about the agreements with various mills for the export of a total of 60 lakh tonne of sugar which would be completed by December while the physical deliveries to be executed by March-end.
After last year’s record 112 lakh tonne of exports, Indian millers talked about another year of good overseas sales. The central government had issued a mill-wise quota for exports with a total 60 lakh tonne of sugar expected to be shipped out in the first tranche. The industry hopes that the government would allow exports of 20 lakh tonne of further exports once the first lot is exported out.
Shaikh, who is also the managing director of MEIR commodities, an export-import firm, said they have seen good demand from countries like China, Bangladesh and countries in the Horn of Africa.
At present, the international markets have breached the psychological mark of 20 cents per pound of raw sugar which has also helped the mills to make up their minds. Bullish exports would help mills in laying their hand in liquid cash and ease their liquidity issues. Thanks to exports and diversion of sugar for ethanol has been mainly responsible for mills to improve their financial situations and race up payment of cane dues to farmers.
However, the good demand has seen many mills trying to or renegotiating their contracts for exports. This, exporters pointed out, was for commanding higher prices for the exports. Mills in the past had signed contracts of exports at prices which were lower than the present prices. Industry sources said post the demand for sugar, the international prices have jumped a few cents which saw a significant number of mills trying to renegotiate their contracts. “This has had an effect in the international markets. Other than price rise, this can also cause problems for future contracts,” said an exporter on condition of anonymity.
Meanwhile, the sugar season in Maharashtra as well as Uttar Pradesh has been racing ahead. While it is early, mills in Maharashtra have talked about a drop in per acre yield which might affect the production figures at the end of the season.