Four dealers told Reuters that Indian sugar mills have signed contracts to export 550,000 tonnes of the sweetener in recent days, as rising global prices and a weaker rupee have made overseas sales attractive.
Higher exports from the world’s second-largest sugar producer could test a spurt in global prices, buoyed by rising crude oil prices and lower output in top exporter Brazil.
The shipments will help India reduce its stockpiles and support local prices of the sweetener, crucial in ensuring that lakhs of sugarcane farmers get the government-mandated price.
Rahil Shaikh, managing director, MEIR Commodities India, said, “In the last few days, mills from Maharashtra and Karnataka were active in the market. They were getting better realization from exports than local sales.”
Dealers estimate that Indian mills have so far signed contracts to export 6.4 million tonnes of sugar in 2021-22. Of this, about 50 lakh tonnes have already been dispatched.
Over the past few days, Indian traders mainly sold raw sugar to Asian buyers such as Indonesia and Bangladesh, who were trying to replenish their inventories ahead of the Muslim holy month of Ramzan, with a global trading firm based in Mumbai. said a merchant.
India exported a record 7.2 million tonnes of sugar last season, taking advantage of government subsidies for overseas sales.
But this year, mills may export 7.5 million to 8 million tonnes without government incentives, said a New Delhi-based dealer with a global trading firm.
“The rupee and global prices are getting support,” the dealer said. If the government does not impose any restrictions on exports due to the fear of inflation, then exports may increase to 8 million tonnes.
The rupee fell to a record low this week, pushing up margins for traders from overseas sales.
The Mumbai-based dealer said local sugar prices may drop sharply due to record production, but export demand is supporting it.
India is likely to produce a record 33.3 million tonnes of sugar in 2021-22, which is about 7% higher than last year.