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Indian sugar exporters are holding off signing forward contracts in anticipation of more upsides in prices

23 Sep 2021 6:28 pm
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NEW DELHI, Sept 23 (Commoditiescontrol) - Indian sugar exporters are presently seen reluctant to sign forward contracts for shipments of the sweetener in the upcoming sugar season 2021-22 which starts on October 1, 2021 in anticipation of further upside movement in the prices, said a trade source. However, the millers of the country have already signed contracts of exports of over 1.2 million tonnes of sugar, mostly raw sugar for shipment in the next season, as per the industry sources.

Raw sugar prices rallied nearly 74 percent during the past one year when US sugar #11 rose to 20.37 cents per pound last month which is the highest level of sugar prices in the past four years.

Trade analysts are of the opinion that exporters are holding off signing any contracts for shipment in the upcoming season as they expect prices of the sweetener will further rise above 20 cents per pound.

Recent rally in crude oil has raised the prospects of more diversion of more sugarcane for ethanol production in Brazil, world’s largest sugar grower.

However, Adhir Jha, chief executive officer and managing director of Indian Sugar Exim Corp has to say that there is no buyer of white sugar in the overseas market and India has only white sugar in the stocks presently while raw sugar will come in November. That is the reason new contracts are not being signed for sugar exports but with the start of the new session new contracts are expected to be signed, he added.

India has exported over 7 million tonnes of sugar in the current season which is ending on September 30, 2021 and forward contracts have already been signed for over 1.2 million tonnes to be exported in the upcoming season, he added.

The new cane crushing season starts on October 1, 221 in the country but arrivals of fresh sweetener are expected to begin in November when Indian sugar mills will be able to ship raw sugar. The major buyers of white sugar from India Srilanka and Afghanistan are facing their own economic and political crisis respectively; therefore, there is least scope for the exports of white sugar.

Meanwhile, domestic prices of sugar have shot up considerably in the country ahead of the festive season, that's also the reason mills are reluctant to export sugar as transportation cost from Uttar Pradesh to Kandla port comes to over Rs 2000 per tonnes. The mills of Uttar Pradesh have also developed their capacity for ethanol production.

However, transportation cost from mills to port in Maharashtra comes around Rs 1000-1,500 per tonne. Therefore, export of sugar without subsidy could be more doable for mills of Maharashtra as compared to Uttar Pradesh.

(By Commoditiescontrol Bureau)

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