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  • Writer's pictureTritech

India contracts 28 lakh tonne of sugar exports

Indian sugar mills have benefited from the rise in sugar prices in the international market, as the demand for sugar exports from the country has increased and 28 lakh tonnes of sugar export deals have been sealed so far.

The increased sugar export demand has led to a spurt in sugar prices in the domestic market. The price of sugar have increased by about Rs 100 per quintal. The National Federation of Co-operative Sugar Factories (NFCSF) estimates that sugar exports will meet the 60 lakh tonnes target this year.

NFCSF Managing Director Prakash Naiknavare said, “The export demand has increased due to the rise in the prices of sugar in the global market. It seems that the sugar exports target fixed by the government will be met this year.” The central government has set a target of 6 million tonnes of sugar exports for domestic sugar mills under the Maximum Admissible Export Quantity (MAEQ) for the 2019-20 season.

Last year, the government had set a target of 5 million tonnes of sugar under Minimum Indicative Export Quotas (MIEQ). However, India managed only 38 lakh tonnes of sugar exports.

“The current season or sugar production and marketing year 2019-20 (October), which started from October 1, has not even completed four months, but 28 lakh tonne of sugar export deals have been made and the supply will continue to rise further as the supply is less than the demand. Domestic mills will benefit from sugar exports,” Naiknavare said.

In the international market, the price of raw sugar has gone up by 18 per cent in the last three months and the price of white sugar has gone up by more than nine per cent, which has helped the Indian sugar mills’ exports.

US sugar-11 price was 14 cents per pound higher on Monday. London sugar also closed at $376.80 per ton in the previous session. “According to the prevailing price of sugar in the international market, sugar mills in India are getting ex-mill price of white sugar at around Rs 2,300 per quintal, while that of raw sugar is around Rs 2,100 per quintal. If we add incentive of Rs 1045 per quintal being given by the government under the MAEQ scheme, then the price of white sugar exceeds Rs 34,00 per quintal, which is higher than the current domestic prices,” Naiknavare said.

Sushil Kumar, a Delhi-based sugar trader, said that the ex-mill rate of old sugar in Uttar Pradesh is currently Rs 3,280-3,300 per quintal, while the ex-mill rate of new sugar is Rs 3,250-3,290 per quintal. “The government has sought details of exports made by sugar mills till December 31. The government has set a quota of 60 lakh tonnes of sugar for 530 sugar mills. However, few mills did not export or they do not want to export. In such a situation, their quota will be given to the mills who are exporting,” said Kumar.

He informed that after the export of 60 lakh tonnes of sugar by September 30 this year, the closing stock will come down to 100 lakh tonnes.

According to NFCSF estimates, sugar production in the current season is 263 lakh tonnes, while last year’s outstanding stock is 145 lakh tonnes. Thus the total supply is 408 lakh tonnes. After extracting 60 lakh tonnes of exports and about 260 lakh tonnes for domestic consumption, the remaining stock will be 88 lakh tonnes. Of this, 40 lakh tonnes of buffer stock will remain.

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