Indian sugar mills reduce exports amid falling prices, strengthening rupee: Report
Mumbai/IBNS: The mill owners in India are deferring the signing of new sugar export contracts due to big differences between local and global rates triggered by decline in global prices and appreciation in the value of the rupee, Reuters reported.
Not signing new export contracts is likely to support the global prices which fell to the lowest in 5-1/2 months, the report noted, adding that the situation can also prompt Indian mill owners to divert more sugar to ethanol plants.
"At current price level exports are not viable from India. Mills are getting much higher prices in the local market," said Ravi Gupta, chairman of the export committee at All India Sugar Traders Association (AISTA).
In the local market, mills were selling sugar at Rs 32,000 to Rs 35,000 per tonne compared to around Rs 30,000 offered to overseas shipments, the report said.
Indian mills went for aggressive selling in the international market when the sugar prices were around 20 cents per lb after which their stockpiles are at a comfortable level, allowing them to delay the signing of export deals, Rahil Shaikh, managing director of MEIR Commodities India told Reuters.
India exported a record 7.2 million tonnes of sugar in 2020/21, benefitting from the government subsidy for overseas sales.
Since the Union government has also increased the price at which oil marketing companies will buy ethanol from sugar mills, the production of ethanol has become lucrative.
Currently, sugar mills are focussing on completing the deals already signed rather than signing new contracts and they would come forward only if the global prices come closer to local prices, said a Mumbai-based dealer with a global trading house, according to the Reuters report.
He also said that India could export 6 million tonnes of sugar in the current season, it added.