Sugar exports beat lockdown blues, could hit 65 lakh tonnes

Increased demand from international markets has seen India’s sugar exports reach a new high. So far, 59 lakh contracts have been signed, of which 43 lakh have already been shipped out of the country.

Prakash Naiknavare, managing director of the National Federation of Sugar Cooperatives Limited, said the country was likely to export more than its quota of 60 lakh tonnes, with some factories even starting to export sugar without taking advantage of the subsidy. government.

At the start of the 2020-2021 sugar season, the central government announced a subsidy program of Rs 3,500 crore to ship 60 lakh per ton of sweetener. In an effort to reduce the glut of sugar in the domestic market, factories could benefit from this subsidy after completing their quota. This will be the second year in a row that the country has seen a subsidy program for sugar exports to help the sector reduce stocks. It is also the second year in a row that India has reported good exports. Last year around 59 lakh of sugar were exported.

Despite the second wave of coronavirus infections, international sugar prices have seen steady gains, mostly against a backdrop of crude prices. Brazil, a world leader in sugar production, had diverted a substantial part of its sugarcane harvest to ethanol production, which had led to a downward revision of its sugar production. Many markets traditionally captured by Brazil have now turned to India to meet their sugar needs.

Naiknavare said the export basket contained an equal share of raw sugar and white sugar. Countries like Indonesia and Afghanistan have been the main destinations for Indian sugar, while African countries have become major markets for raw sugar.

At present, the output of exported sugar from the factory is around Rs 2,900 / quintal and the amount of the subsidy is sufficient for the factories to make a net profit.

“Some of the white sugar is also transported through refineries of Indian origin to markets in the Middle East,” Naiknavare said.

What makes this season interesting is the willingness of the mills to export sugar without a subsidy under what is called an “open general license”. “Current international prices are good enough for such exports, which would help factories reduce inventory and save on bank interest,” Naiknavare said.

He said about 5 lakh per ton of sweetener could be exported in this way. The National Federation urged its members to take advantage of rising international prices. Asked about the amount of the pending grant from the government, Naiknavare said the majority of the pending grant has been cleared, with around 500 crore rupees still pending. “This too will be erased once the finance ministry transfers the funds,” he said.

The current year has been good for the sugar sector, with domestic sales also remaining healthy. Contrary to previous forecasts of weak sales due to the Covid-19 lockdown in April, sales have been good, especially from industrial buyers. “Last year we saw domestic consumption drop to 250 lakh ton, but this year we think domestic consumption would be around 255 lakh ton,” he said.

In the event that the industry reports 65 lakh tonnes of exports, the opening stock for the 2021-2022 sugar season, which begins in October, will fall below 100 lakh tonnes. After years of excess stock, this would be a welcome change for the industry as the ex-factory prices will be good enough for the mills to pay the cane growers on time.

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