Indian mills likely to export 7 million tonnes of sugar this year

Indian sugar mills are looking to export an additional one million tonnes of sugar, about 18 per cent more than last year, during the current sugar season that ends in September as international prices are favourable.

This is in addition to the export quota of 6 million tonnes fixed for the current season. Of this, the mills have already contracted 5.7 million tonnes for the current season (2020-21) till May. In 2019-20, mills exported 5.95 million tonnes.

“At this stage, we cannot estimate how much can be exported. Just three months ago, we could not export without a subsidy. Considering the unexpected lower production in Brazil and expected decline in the production from Thailand, prices are moving up. There is an opportunity for Indian sugar mills to export much more this year,” Abinash Verma, Director General, Indian Sugar Mills Association (ISMA) told DH.

As per the International Sugar Organisation, global sugar deficit during the current sugar year is estimated at 4.78 million tonnes.

Verma said Indian sugar mills could export at least one million tonnes more than the export quota this year due to the attractive prices internationally. “The port-based states like Maharashtra and Karnataka can export more than mills in Uttar Pradesh, which are happy to sell in the domestic market,” he said.

The rise in international prices is due to the expectation of lower sugar output from Brazil and Thailand. Brazil is also increasing the diversion of cane towards ethanol production due to high crude prices. The Brazilian output is likely to be lower by 7 million tonnes this year.

The current prices in the international markets are almost at par with the ex-mill prices in India. The millers will be happy to export if they get even a rupee less than the ex-mill prices in India because it gives them an opportunity to reduce their stocks ahead of the next crushing season, Verma said.

Currently, mill-gate prices are around Rs 31-31.5 per kg in Maharashtra and Karnataka. “Even if we get Rs 30 per kg also, some mills would be happy to export”, he said. Prices in the international markets are around 17.71 cents per lb (pound) of raw sugar. Exporters are currently offering Rs 30 per kg at the mill gate. “The pressure of surplus stock and pressure of cash flows is enabling the millers to export at this rate,” he said.

The expected closing balance as of September 30, 2021, is 8.8 million tonnes of surplus stocks. The millers do not want to carry more than 5 million tonnes. Another 3.8 million tonnes could be exported. But the industry is likely to export half a million to one million tonnes under the open general licence over and above the export quota of 6 million tonnes, Verma added.

Despite higher exports for the season, the industry will close the current sugar year with a surplus of 8.8 million tonnes, he said.

The domestic consumption is expected to be 26 million tonnes this year by September, a growth of 2.8 per cent over last year, as there has been no destruction to the consumption due to Covid-19 and subsequent lockdowns in several states. The domestic production of sugar has increased by 12.7 per cent to 30.9 million tonnes in the 2020-21 season as against 27.41 million tonnes last year, according to ISMA data.