Indian sugar mills have signed deals to export 550,000 tonnes of the sweetener in recent days as rising global prices and a weak rupee made overseas sales lucrative, four traders told Reuters.
Higher exports from the world’s second-biggest sugar producer could halt the recovery in global prices, which was fueled by a rise in crude oil prices and lower production from top exporter Brazil.
The shipments will also help India reduce its stock levels and prop up local prices of the sweetener, which is crucial to ensure millions of sugarcane farmers receive government-mandated prices.
“In the last few days, mills from Maharashtra and Karnataka have been active in the market. They got better results from exports than from local sales,” said Rahil Shaikh, Managing Director of MEIR Commodities India.
Indian mills have so far signed deals to export 6.4 million tonnes of sugar in 2021-22, traders estimate. Almost 5 million tons of this has already been shipped.
In recent days, Indian traders have been selling raw sugar mostly to Asian buyers like Indonesia and Bangladesh, who are trying to replenish stocks ahead of the Muslim holy month of Ramadan, a Mumbai-based trader for a global trading firm said.
India exported a record 7.2 million tonnes of sugar last season, taking advantage of government subsidies for overseas sales.
But this year, without government incentives, mills could export 7.5 to 8 million tons, a New Delhi-based trader told a global trading firm.
“Rupee and global prices are supportive. If the government doesn’t impose export restrictions for fear of inflation, exports could rise to 8 million tons,” the trader said.
The rupee depreciated to a record low this week, boosting traders’ margin from overseas sales.
Local sugar prices could have fallen sharply on record production but export demand is supportive, the Mumbai-based trader said.
India is expected to produce a record 33.3 million tonnes of sugar in 2021-22, up nearly 7% year-on-year.