Indian sugar mills signed agreements to export 550,000 tonnes of sweetener in recent days, as rising global prices and a weak rupee made overseas sales profitable. Higher exports from the world's second-largest sugar producer could put a damper on the global price rally, which has been fueled by a spike in crude oil prices and lower output in top exporters Brazil.
The shipments will also help India reduce its stockpile and support local sweetener prices, which is critical in ensuring that millions of cane farmers receive government-mandated prices.
"Mills from Maharashtra and Karnataka have been active in the market in recent days. They were making more money from exports than from domestic sales "MEIR Commodities India's managing director, Rahil Shaikh, stated
Dealers estimate that Indian mills have signed contracts to export 6.4 million tonnes of sugar in 2021/22. Almost 5 million tonnes of this total have already been shipped.
According to a Mumbai-based trader with a global trading firm, in the last few days, Indian traders primarily sold raw sugar to Asian buyers such as Indonesia and Bangladesh, who were attempting to replenish their inventories ahead of the Muslim holy month of Ramadan.
In the previous season, India exported a record 7.2 million tonnes of sugar, taking advantage of a government subsidy for overseas sales. However, without government incentives, mills could export 7.5 million to 8 million tonnes this year, according to a New Delhi-based dealer with a global trading firm.
"The Indian rupee and global prices are both supportive. If the government does not impose any restrictions on exports in order to prevent inflation, exports could reach 8 million tonnes, "said the dealer. This week, the rupee depreciated to a record low, increasing traders' margins from overseas sales.
Local sugar prices may have fallen sharply due to record output, but export demand is supporting, according to the Mumbai-based dealer. In 2021/22, India is expected to produce a record 33.3 million tonnes of sugar, up nearly 7% from the previous year.
